Will the company pay more or less tax if it uses FIFO rather than LIFO? How much more or less?
Problem 5-10 Comparison of Inventory Costing Methods—Periodic System
Bitten Company’s inventory records show 600 units on hand on October 1 with a unit cost of
$5 each. The following transactions occurred during the month of October:
Date                  Unit Purchases              Unit Sales
LO5•6 • 7
Â
Â
|
October 4
|
Â
|
500Â @ $10.00
|
|
8
|
800Â @ $5.40
|
Â
|
|
9
|
Â
|
700Â @ $10.00
|
|
18
|
700Â @ $5.76
|
Â
|
|
20
|
Â
|
800Â @ $11.00
|
|
29
|
800Â @ $5.90
|
Â
|
All expenses other than cost of goods sold amount to $3,000 for the month. The company uses an estimated tax rate of 30% to accrue monthly income taxes.
Required
1.       Prepare a chart comparing cost of goods sold and ending inventory using the periodic system and the following costing methods:
Cost of Goods Sold            Ending Inventory               Total
Weighted average FIFO
LIFO
2.       What does the Total column represent?
3.       Prepare income statements for each of the three methods.
4.       Will the company pay more or less tax if it uses FIFO rather than LIFO? How much more or less?
Â
Â
Answers
Status NEW
Posted 24 May 2017 11:05 AM
My Price 8.00
-----------
Attachments
file 1495627095-1416641_1_636311364739678515_Periodic-Inventory-costing-methods.xlsx preview (236 words )
14-----------166-----------41&-----------amp-----------;am-----------p;i-----------nfo-----------Id=-----------494-----------534-----------&am-----------p;a-----------mp;-----------utP-----------rob-----------lem----------- 5------------10 -----------Com-----------par-----------iso-----------n o-----------f I-----------nve-----------nto-----------ry -----------Cos-----------tin-----------g M-----------eth-----------ods-----------—-----------Per-----------iod-----------ic -----------Sys-----------tem-----------Bit-----------ten----------- Co-----------mpa-----------nyâ-----------€™s----------- in-----------ven-----------tor-----------y r-----------eco-----------rds----------- sh-----------ow -----------600----------- un-----------its----------- on----------- ha-----------nd -----------on -----------Oct-----------obe-----------r 1----------- wi-----------th -----------a u-----------nit----------- co-----------st -----------of -----------$5 -----------eac-----------h. -----------The----------- fo-----------llo-----------win-----------g t-----------ran-----------sac-----------tio-----------ns -----------occ-----------urr-----------ed -----------dur-----------ing----------- th-----------e m-----------ont-----------h o-----------f O-----------cto-----------ber-----------:Bi-----------tte-----------n C-----------omp-----------any-----------Inv-----------ent-----------ory----------- Re-----------cor-----------ds -----------for----------- Mo-----------nth----------- en-----------ded----------- Oc-----------tob-----------erP-----------urc-----------has-----------eSo-----------ldB-----------ala-----------nce-----------Tra-----------nsa-----------cti-----------onu-----------nit-----------sRa-----------teC-----------ost-----------Tot-----------alc-----------ost----------- of----------- go-----------ods----------- av-----------ail-----------abl-----------e$S-----------ale----------- Sa-----------leT-----------ota-----------lsc-----------ost----------- of----------- go-----------ods-----------
Not Rated(0)