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E7-11 Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,140 units at $37; purchases, 7,850 units at $39; expenses (excluding income taxes), $193,100; ending inventory per physical count at December 31, current year, 1,730 units; sales, 8,260 units; sales price per unit, $80; and average income tax rate, 32 percent. Required: 1-a. Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. 1-b. Prepare income statements under the FIFO, LIFO, and average cost inventory costing methods. 2. Between FIFO and LIFO, which method is preferable in terms f(a) net income and (b) income taxes paid (cash flow)? 3. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow), assuming that prices were falling? Complete this question by entering your answers in the tabs below. Req la Req 1b Cost of Goods Sold Beginning inventory Purchases Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. Note: Do not round your intermediate calculations. Round your final answers to the nearest whole dollar amount. Goods available for sale Ending inventory Req 2 Cost of goods sold Units Req 3 2.140 7,850 9,990 1,730 Inventory Costing Method FIFO LIFO $ 79,180 $ 306,150 385,330 Average Cost 79,180 306,150 385,330 79,180 $ 306,150 385,330

E7-11 Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,140 units at $37; purchases, 7,850 units at $39; expenses (excluding income taxes), $193,100; ending inventory per physical count at December 31, current year, 1,730 units; sales, 8,260 units; sales price per unit, $80; and average income tax rate, 32 percent. Required: 1-a. Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. 1-b. Prepare income statements under the FIFO, LIFO, and average cost inventory costing methods. 2. Between FIFO and LIFO, which method is preferable in terms f(a) net income and (b) income taxes paid (cash flow)? 3. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow), assuming that prices were falling? Complete this question by entering your answers in the tabs below. Req la Req 1b Cost of Goods Sold Beginning inventory Purchases Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. Note: Do not round your intermediate calculations. Round your final answers to the nearest whole dollar amount. Goods available for sale Ending inventory Req 2 Cost of goods sold Units Req 3 2.140 7,850 9,990 1,730 Inventory Costing Method FIFO LIFO $ 79,180 $ 306,150 385,330 Average Cost 79,180 306,150 385,330 79,180 $ 306,150 385,330

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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E7-11 Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,140 units at $37; purchases, 7,850 units at $39; expenses (excluding income taxes), $193,100; ending inventory per physical count at December 31, current year, 1,730 units; sales, 8,260 units; sales price per unit, $80; and average income tax rate, 32 percent. Required: 1-a. Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. 1-b. Prepare income statements under the FIFO, LIFO, and average cost inventory costing methods. 2. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow)? 3. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow), assuming that prices were falling? Complete this question by entering your answers in the tabs below. Req la Req 1b Cost of Goods Sold Beginning inventory Purchases Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. Note: Do not round your intermediate calculations. Round your final answers to the nearest whole dollar amount. Goods available for sale Ending inventory Req 2 Cost of goods sold Req 3 Units Inventory Costing Method FIFO LIFO 2,140 $ 7,850 9.990 1,730 79,180 $ 306,150 385,330 < Req 1a 79,180 306,150 385,330 Average Cost $ 79,180 306,150 385.330 Req 1b >
Transcribed Image Text:E7-11 Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,140 units at $37; purchases, 7,850 units at $39; expenses (excluding income taxes), $193,100; ending inventory per physical count at December 31, current year, 1,730 units; sales, 8,260 units; sales price per unit, $80; and average income tax rate, 32 percent. Required: 1-a. Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. 1-b. Prepare income statements under the FIFO, LIFO, and average cost inventory costing methods. 2. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow)? 3. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow), assuming that prices were falling? Complete this question by entering your answers in the tabs below. Req la Req 1b Cost of Goods Sold Beginning inventory Purchases Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. Note: Do not round your intermediate calculations. Round your final answers to the nearest whole dollar amount. Goods available for sale Ending inventory Req 2 Cost of goods sold Req 3 Units Inventory Costing Method FIFO LIFO 2,140 $ 7,850 9.990 1,730 79,180 $ 306,150 385,330 < Req 1a 79,180 306,150 385,330 Average Cost $ 79,180 306,150 385.330 Req 1b >
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