Question
Novak Sports began operations on January 2, 2020. The following stock record card for footballs was taken from the records at the end of the
Novak Sports began operations on January 2, 2020. The following stock record card for footballs was taken from the records at the end of the year.
Date | Voucher | Terms | Units Received | Unit Invoice Cost | Gross Invoice Amount | |||||||||
1/15 | 10624 | Net 30 | 75 | $32 | $2,400 | |||||||||
3/15 | 11437 | 1/5, net 30 | 90 | 25 | 2,250 | |||||||||
6/20 | 21332 | 1/10, net 30 | 115 | 24 | 2,760 | |||||||||
9/12 | 27644 | 1/10, net 30 | 109 | 19 | 2,071 | |||||||||
11/24 | 31269 | 1/10, net 30 | 101 | 17 | 1,717 | |||||||||
Totals | 490 | $11,198 |
A physical inventory on December 31, 2020, reveals that 119 footballs were in stock. The bookkeeper informs you that all the discounts were taken. Assume that Novak Football Shop uses the invoice price less discount for recording purchases.
Compute the December 31, 2020, inventory using the FIFO method.
Ending Inventory using the FIFO method | $ |
Compute the 2020 cost of goods sold using the LIFO method.
Cost of Goods Sold using the LIFO method | $ |
What method would you recommend to the owner to minimize income taxes in 2020 based on the inventory info?
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