P6-7A week 2 Team assignment

P6-7A week 2 Team assignment - Solutions Guide: Please do...

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Solutions Guide: Please do not present as your own. This is only meant as a solutions guide for you to answer the problem on your own. I recommend doing this with any content you buy online whether from me or from someone else. P6-7A The management of Utley Inc. asks your help in determining the comparative effects of the FIFO and LIFO inventory cost flow methods. For 2008 the accounting records show these data. Inventory, January 1 (10,000 units) $ 35,000 Cost of 120,000 units purchased 504,500 Selling price of 100,000 units sold 665,000 Operating expenses 130,000 Units purchased consisted of 35,000 units at $4.00 on May 10; 60,000 units at $4.20 on August 15; and 25,000 units at $4.50 on November 20. Income taxes are 28%. Instructions (a) Prepare comparative condensed income statements for 2008 under FIFO and LIFO. (Show computations of ending inventory.) (b) Answer the following questions for management in the form of a business letter. (1) Which inventory cost flow method produces the most meaningful inventory amount for the balance sheet? Why? Calculate
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This note was uploaded on 06/20/2011 for the course ACCT 281 taught by Professor Shelburn during the Spring '10 term at University of Phoenix.

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P6-7A week 2 Team assignment - Solutions Guide: Please do...

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