Send help

CP7-1 Analyzing the Effects of Four Alternative Inventory Costing Methods [LO 7-3) 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. ts Unit Cost Beginning inventory, January 1 Transactions during the year: a. Purchase on account, March 2 b. Cash sale, April 1 ($44 each) c. Purchase on account, June 30 d. Cash sale, August 1 ($44 each) $28 3e 34 188 290 (330) 230 (55) 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