The owner of Fardan Stereo Sales showed the following adjusted trial balance at December 31. 2014: The
Question:
The owner of Fardan Stereo Sales showed the following adjusted trial balance at December 31. 2014:
Required:
1. Calculate the merchandise inventory values at December 31, 2014, under each inventory costing method shown in the schedule above.
2. Prepare a single-step income statement (showing one line each for net sales, cost of goods sold, operating expenses, and interest expense) for the year ended December 31, 2014, along with a balance sheet at December 31, 2014, assuming:
a. FIFO
b. Moving weighted average.
Analysis Component:
3. Does the schedule above reflect rising costs for merchandise inventory or falling costs? Explain how you know.
4. Based on your results in Part 2, which method should the owner use if he wants to:
a. Maximize net income?
b. Maximize assets?
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Step by Step Answer:
Related Book For
Fundamental Accounting Principles
ISBN: 978-0071051507
Volume I, 14th Canadian Edition
Authors: Larson Kermit, Tilly Jensen
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