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Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,000 units at $38; purchases, 8,000 units at $40; expenses (excluding income taxes), $194,500; ending inventory per physical count at December 31, current year, 1,800 units; sales, 8,200 units; sales price per unit, $75; and average income tax rate, 30 percent.

Required:
Compute cost of goods sold and prepare income statements under the FIFO, LIFO.

Respuesta :

facundobuzzetti

Answer:

Results are below.

Explanation:

Under FIFO (first-in, first-out), the cost of goods sold is calculated using the cost of the firsts units incorporated into inventory.

COGS= 2,000*38 + 6,200*40= $324,000

Income statement:

Sales= 8,200*75= 615,000

COGS= (324,000)

Gross profit= 291,000

Tax= (291,000*0.3)= (87,300)

Net operating income= 203,700

Under the LIFO (last-in, first-out), the cost of goods sold is calculated using the cost of the lasts units incorporated into inventory.

COGS= 8,000*40 + 200*38= $327,600

Income statement:

Sales= 615,000

COGS= (327,600)

Gross profit= 287,400

Tax= (287,400*0.3)= (86,220)

Net operating income= $201,180

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