Perpetual Method Jones Company buys and sells one product. Its beginning inventory, purchases, and sales during calendar year 2015 fallow: Units Acquired at Co 400 unita @$14.$5.00 200 uis 300 "nits @$16-%4.800 Unks Sold at Retail Unit Inmenbory Jan. Beg inventory-... Harch tO Purchase Hw 9 Rechase . . 200 uni 400 units 200 units iS-$ 1.000 ep 22 Purchase 2SO units @ $20-%5.000 750 units 100 unis 535 Total 250 units 0500 i Additional tracking data for specific identification: (1) January 15 sale-200 units @ $14.2) April 1 sale-200 units @ $15, and(3|Navember 1 sale-200 units $14 and 100 units $20 Required 1 Calculate the cost af goods available for sale. 2 Apply the four different methods of inventory costing (FIFO, LIFO, weighted average, and specific identification) to calculate ending inventory and cost of goods sold under each methad using the perpetual system. 3 Compute gross profit earned by the company for each of the four costing methods in part 2. Also, report the inventory amount reported on the balance sheet for each af the four methods 4 In preparing financial statements for year 2015, the financial officer was instructed to use FIFO but failed to do so and instead computed cost af gaods sold according to LIFO, which led to a $1,400 overstatement in cost af goads sold from using LIFO. Determine the impact on year 2015's income from the error. Also determine the effect of this error on year 2016s income. Assume na income taxes S Management wants a report that shows how changing from FIFO to another methad would change net income. Prepare a table showing (1) the cost of goods sold amount under each of the four methods, 12) the amount by which each cost of goods sold total is different from the FIFO cost of goads sold, and (3) the effect on net income if another methad is used instead of FIFO PLANNING THE SOLUTION 1 Compute cost of goods available for sale by multiplying the units of beginning inventory and each purchase by their unit casts to determine the total cast of goods available for sale. 2 Prepare a perpetual FIFO table starting with beginning inventory and showing how inventory changes after each purchase and after each sale 3 Prepare a perpetual LIFO table starting with beginning inventory and showing how inventory changes after each purchase and after each sale 4. Make a table of purchases and sales recalculating the average cast of inventory priar to each sale to arrive at the weighted average cost of ending inventory. Tatal the average costs assaciated with each sale to determine cast of goods sold. 5 Prepare a table showing the computation of cast of goods sald and ending inventary using the specific identification method. 6 Compare the year-end 2015 inventory amounts under FIFO and LIFO to determine the misstatement of year 2015 income that results from using LIFO. The errors for year 2015 and 2016 are equal in amount but apposite in effect. 7 Create a table showing cast of goods sald under each method and how net income would differ from FIFO net income if an alternate methad were adopted