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Perpetual Inventory Method Better Bottles, Inc. uses a Perpetual inventory system and has the following information available: Description # of Units Cost per Unit Total

Perpetual Inventory Method
Better Bottles, Inc. uses a Perpetual inventory system and has the following information available:
Description # of Units Cost per Unit Total Cost
Beginning inventory 20 $20.00 $400
Jan 5 sold 15
Jan 15 purchase 27 $22.00 594
Jan 18 sold 21
Jan 20 purchase 33 $30.00 990
Total goods available for sale 80 $1,984
Totals goods sold 36
Required:
1 Calculate both Cost of goods sold and Ending inventory using Perpetual FIFO Method.
2 Calculate both Cost of good sold and Ending Inventory using Perpetual LIFO Method.
3 Use your calculations from 1-2 and complete the Income Statement.
The company income tax rate: 0.25
4 Explain why in times of rising prices (as shown above) the FIFO Method will cause a company to have
higher net income and a lower value in inventory on the balance sheet.
1 FIFO Cost of Goods Sold - Perpetual
Sold # of Units Cost per Unit Total Cost
Total Cost of Goods Sold
FIFO Ending Inventory - Perpetual
# of Units Cost per Unit Total Cost
Beginning inventory
+Purchase
+Purchase
(Less Cost of Goods Sold)
Ending Inventory
2 LIFO Cost of Goods Sold - Perpetual
Sold # of Units Cost per Unit Total Cost
Total Cost of Goods Sold
LIFO Ending Inventory - Perpetual
Inventory Available # of Units Cost per Unit Total Cost
Beginning inventory
+Purchase
+Purchase
(Less Cost of Goods Sold)
Ending Inventory
3 Income Statement - Perpetual Inventory Method
FIFO LIFO
Sales revenue, net 25,000 25,000
Cost of goods sold
Gross profit
Operating expenses 8,000 8,000
Operating income before tax
Income tax expense
Net income

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