Exercise 6-4 Income effects of inventory methods L.O. A1
Park Company reported the following March purchases and sales data for its only product.
Date
Activities
Units Acquired at Cost
Units Sold at Retail
Mar.
1
Beginning inventory
150
units
@ $7.00
=
$
1,050
Mar.
10
Sales
90
units
@$15
Mar.
20
Purchase
220
units
@ $6.00
=
1,320
Mar.
25
Sales
145
units
@$15
Mar.
30
Purchase
90
units
@ $5.00
=
450
Totals
460
units
$
2,820
235
units
Park uses a perpetual inventory system. For specific identification, ending inventory consists of 225 units, where 90 are from the March 30 purchase, 80 are from the March 20 purchase, and 55 are from beginning inventory.
1.
Complete comparative income statements for the month of March for Park Company for the four inventory methods. Assume expenses are $1,600, and that the applicable income tax rate is 30%.(Round per unit costs to three decimal places.Round your answers to the nearest dollar amounts. Input all amounts as positive values. Omit the “$” sign in your response.)
PARK COMPANY Income Statements For Month Ended March 31
Specific Identification
Weighted Average
FIFO
LIFO
Sales
$
Problem 6-1A Part 1
Required:
1.
Compute cost of goods available for sale and the number of units available for sale. (Omit the “$” sign in your response.)
Cost of goods available for sale
$
Problem 6-1A Part 2
2.
Compute the number of units in ending inventory.
Ending inventory
Problem 6-1A Part 3
3.
Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d)specific identification. For specific identification, the March 9 sale consisted of 40 units from beginning inventory and 170 units from the March 5 purchase; the March 29 sale consisted of 20 units from the March 18 purchase and 60 units from the March 25 purchase. (Due to rounding, the sum of Cost of Goods Sold and Ending inventory may not equal the Cost of Good available for sales. Round your weighted average cost to 3 decimal places. Round your final answers to nearest whole dollar amount. Omit the “$” sign in your response.)
Ending Inventory
(a)
FIFO
$
Problem 6-1A Part 4
4.
Compute gross profit earned by the company for each of the four costing methods. (Round your per unit costs to 3 decimal places and inventory balances and final answer to the nearest dollar amount. Omit the “$” sign in your response.)
Gross profit
FIFO
$
Problem 6-5AA Part 1
Required:
1.
Compute the number and total cost of the units available for sale in year 2011.(Omit the “$” sign in your response.)
Number of units available for sale
Problem 6-5AA Part 2
2.
Compute the amounts assigned to the 2011 ending inventory and the cost of goods sold. (Input all amounts as positive values. Round per unit costs to 3 decimal places. Round your final answers to the nearest dollar amount. Omit the “$” sign in your response.)
9 years ago
15
