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of August 31, 2005, was selected from the remainder of the beginning inventory, with the balance from the purchase of May 1, 2009. 3. Of the four methods, which will result in the highest gross profit? Which will result in the lowest income taxes? E7-4 Inferring Merchandise Purchases The Gap, Inc., is a specialty retailer that operates stores selling clothes under the trade names Gap, Fourth and Towne, Banana Republic, and Old Navy. See p 339
Acc 2013, Chapter 7 Lab Practice (Phillips 3e) Page 12 of 12E7-5 Calculating Cost of Ending Inventory and Cost of Goods Sold under Periodic FIFO, LIFO, and Weighted AverageAssume Oahu Kiki's uses a periodic inventory system, which shows the following for the month of January. Sales totaled 240 units. Date Units Unit Cost Total Cost Beg. Inventory January 1 120 $8 Purchase January 15 380 $9 3,420 Purchase January 24 200 $11 2,200 Totals 6,580 Required:1. Calculate the cost of the 240 units sold under the (a) FIFO, (b) LIFO, and (c) weighted average cost methods. a) FIFO __________________ b) LIFO __________________ c) Weighted Avg __________________ 2.Calculate the cost of ending inventory using the (a) FIFO, (b) LIFO, and (c) weighted average cost methods. a) FIFO __________________ b) LIFO __________________ c) Weighted Avg __________________ 3.Double-check your answer to requirements 1 and 2 by using the cost of goods sold equation $960