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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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