Scrappers Supplies tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the annual accounting period, December 31.

Transactions	Units				Unit Cost
Beginning inventory, January 1		210			$	34
Transactions during the year:
a. Purchase on account, March 2		305				36
b. Cash sale, April 1 ($50 each)		(360	)
c. Purchase on account, June 30		260				40
d. Cash sale, August 1 ($50 each)		(90	)

TIP: Although the purchases and sales are listed in chronological order, Scrappers determines the cost of goods sold after all of the purchases have occurred.

Required:

1. Compute the cost of goods available for sale, cost of ending inventory, and cost of goods sold at December 31 under each of the following inventory costing methods: (Round "Cost per Unit" to 2 decimal places.) a. Last-in, first-out. b. Weighted average cost. c. First-in, first-out. d. Specific identification, assuming that the April 1 sale was selected one-fifth from the beginning inventory and four-fifths from the purchase of March 2. Assume that the sale of August 1 was selected from the purchase of June 30.
2. Of the four methods, which will result in the highest gross profit? Which will result in the lowest income taxes?

d. CCompute the cost of goods available for sale, cost of ending inventory, and cost of goods sold at December 31 using the Specific identification method. Assume that the April 1 sale was selected one-fifth from the beginning inventory and four-fifths from the purchase of March 2. Assume that the sale of August 1 was selected from the purchase of June 30. (Round "Cost per Unit" anwers to 2 decimal places.)

Show less

Specific Identification (Periodic)
	Units	Cost per Unit	Total
Beginning Inventory			$0
Purchases
March 2
June 30
Total Purchases	0		0
Goods Available for Sale
Cost of Goods Sold
Units from Beginning Inventory
Units from March 2 Purchase
Units from June 30 Purchase
Total Cost of Goods Sold	0		0
Ending Inventory

Of the four methods, which will result in the highest gross profit?

	Last-in, first-outradio button unchecked1 of 4 Weighted average costradio button unchecked2 of 4 First-in, first-outradio button unchecked3 of 4 Specific identificationradio button unchecked4 of 4

Which will result in the lowest income taxes?

	Last-in, first-outradio button unchecked1 of 4 Weighted average costradio button unchecked2 of 4 First-in, first-outradio button unchecked3 of 4 Specific identificationradio button unchecked4 of 4