Skywalker Ltd uses a periodic inventory system to track its droid inventory. The following information is available about the company’s inventory for 2020: Date Transaction Units Cost per Unit Total Cost 1/1 Beginning Inventory 200 $400 $80,000 5/26 Purchase 500 $500 250,000 11/16 Purchase 300 $600 180,000 1,000 $510,000 1. During 2020, Skywalker Ltd sold 600 droids at $1,000 each. a. Gross profit using the FIFO method b. Ending inventory using the weighted average method (round to 2 decimals at the end) c. Cost of goods sold using the LIFO method d. Which method would result in the lowest taxable income? e. What should Skywalker Ltd. record in their balance sheet for Inventory under each of the following methods if the Net Realizable Value of the inventory is $200,000? (hint: compare the value of Ending Inventory (i.e., cost) to the NRV apply the LCNRV rule) Do this for Average Cost method and LIFO method.
Skywalker Ltd uses a periodic inventory system to track its droid inventory. The following information is available about the company’s inventory for 2020: Date Transaction Units Cost per Unit Total Cost 1/1 Beginning Inventory 200 $400 $80,000 5/26 Purchase 500 $500 250,000 11/16 Purchase 300 $600 180,000 1,000 $510,000 1. During 2020, Skywalker Ltd sold 600 droids at $1,000 each. a. Gross profit using the FIFO method b. Ending inventory using the weighted average method (round to 2 decimals at the end) c. Cost of goods sold using the LIFO method d. Which method would result in the lowest taxable income? e. What should Skywalker Ltd. record in their balance sheet for Inventory under each of the following methods if the Net Realizable Value of the inventory is $200,000? (hint: compare the value of Ending Inventory (i.e., cost) to the NRV apply the LCNRV rule) Do this for Average Cost method and LIFO method.
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