Concept explainers
Accounting for inventory using the perpetual inventory system-FIFO, LIFO, and weighted-average
Athletic Universe began January with merchandise inventory of 65 crates o f vitamins that cost a total of $3,835. During the month, Athletic Universe purchased and sold merchandise o n account as follows:
Jan. 5 | Purchase | 145 crates @ $ 80 each |
13 | Sale | 160 crates @ $ 96 each |
18 | Purchase | 170 crates @ $ 90 each |
26 | Sale | 175 crates@$ 11 0 each |
Requirements
1. Prepare a perpetual inventory record, using the FIFO inventory costing method, and determine the company’s cost of goods sold, ending merchandise inventor y, and gross profit.
2. Prepare a perpetual inventory record, using the LIFO inventory costing method, and determine the company's cost of goods sold, ending merchandise inventory, and gross profit.
3. Prepare a perpetual inventory record, using the weighted-average inventory costing method, and determine the company’s cost of goods sold, ending merchandise inventory, and gross profit. (Round weighted-average cost per unit to the nearest cent and all other amounts to the nearest dollar.)
4. If the business wanted to pay the least amount of income taxes possible, which method would it choose?
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Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
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