ACC 281 E6-7 - Units Unit Cost Total Cost Jan. 1 Beginning...

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Jones Company had 100 units in beginning inventory at a total cost of $10,000.The company purchased 200 units at a total cost of $26,000. At the end of the year, Jones had 80 units in ending inventory. Instructions (a) Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO, (2) LIFO, and (3) average-cost. (b) Which cost flow method would result in the highest net income? (c) Which cost flow method would result in inventories approximating current cost in the balance sheet? (d) Which cost flow method would result in Jones paying the least taxes in the first year? Date Explanation
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Unformatted text preview: Units Unit Cost Total Cost Jan. 1 Beginning Inventory 100 100 10,000 n.d. Purchases 200 130 26,000 300 36,000 A) 1) FIFO Date Units Total Cost n.d 80 130 10,400 Cost of goods available for sale 36,000 Total 80 10,400 Less: Ending Inventory 10,400 25,600 2) LIFO Date Units Unit Cost Total Cost Cost of goods available for sale 36,000 Jan. 1 80 100 8,000 Less: Ending Inventory 8,000 80 8,000 28,000 3) Average-cost 36,000 300 = 120 Cost of goods available for sale 36,000 Units Unit Cost Total Cost Less: Ending Inventory 9,600 80 120 9,600 26,400 Unit Co st B) FIFO C) FIFO D) LIFO...
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ACC 281 E6-7 - Units Unit Cost Total Cost Jan. 1 Beginning...

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