P7-3 (Algo) Evaluating Four Alternative Inventory Methods Based on Income and Cash Flow LO7-2, 7-3

Skip to question

[The following information applies to the questions displayed below.]

At the end of January of the current year, the records of Donner Company showed the following for a particular item that sold at $15.20 per unit:

Transactions	Units	Amount
Inventory, January 1	560	$	1,792
Purchase, January 12	540		2,808
Purchase, January 26	140		1,008
Sale	(420)
Sale	(200)

P7-3 Part 1

Required:

1a. Assuming the use of a periodic inventory system, compute Cost of Goods Sold under each method of inventory: average cost, FIFO, LIFO, and specific identification. For specific identification, assume that the first sale was selected from the beginning inventory and the second sale was selected from the January 12 purchase.

1b. Assuming the use of a periodic inventory system, prepare a partial income statement under each method of inventory: (a) average cost, (b) FIFO, (c) LIFO, and (d) specific identification. For specific identification, assume that the first sale was selected from the beginning inventory and the second sale was selected from the January 12 purchase.