Description
P6A-36A_ Tommorrows
Electronic_Inventory Costing Methods
A Tomorrows Electronic
Center began October with 90 units of inventory that cost $70 each. During
October, the store made the following purchases:
| Units | Rate | |
| Beginning Inventory |
90 | $70 |
| Purchase – Oct_3 |
20 | $75 |
| Purchase – Oct_12 |
40 | $78 |
| Purchase – Oct_18 |
60 | $84 |
Tomorrows
uses the periodic inventory system, and the physical count at October 31
indicates that 110 units of inventory are on hand.
Requirements
1.
Determine the ending inventory and cost of goods sold amounts for the October
financial statements using the weighted average cost, FIFO, and LIFO methods.
2.
Sales revenue for October totalled $26,000. Compute Tomorrows’ gross profit for
October using each method.
3.
Which method will result in the lowest income taxes for Tomorrows? Why?
Which
method will result in the highest net income for Tomorrows? Why?
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