23 Jul FIFO AND LIFO WHICH METHOD WOULD PRODUCE THE MORE FAVORABLE CASH FLOW?
P7-3 Evaluating Four Alternative Inventory Methods Based on Income and Cash Flow LO7-2 7-3 P7-3 Evaluating Four Alternative Inventory Methods Based on Income and Cash Flow LO7-2 7-3 P7-3 Evaluating Four Alternative Inventory Methods Based on Income and Cash Flow LO7-2 7-3 P7-3 Evaluating Four Alternative Inventory Methods Based on Income and Cash Flow LO7-2 7-3 P7-3 Evaluating Four Alternative Inventory Methods Based on Income and Cash Flow LO7-2 7-3 P7-3 Evaluating Four Alternative Inventory Methods Based on Income and Cash Flow LO7-2 7-3 Show more P7-3 Evaluating Four Alternative Inventory Methods Based on Income and Cash Flow LO7-2 7-3 P7-3 Evaluating Four Alternative Inventory Methods Based on Income and Cash Flow LO7-2 7-3 P7-3 Evaluating Four Alternative Inventory Methods Based on Income and Cash Flow LO7-2 7-3 P7-3 Evaluating Four Alternative Inventory Methods Based on Income and Cash Flow LO7-2 7-3 P7-3 Evaluating Four Alternative Inventory Methods Based on Income and Cash Flow LO7-2 7-3 P7-3 Evaluating Four Alternative Inventory Methods Based on Income and Cash Flow LO7-2 7-3 At the end of January 2014 the records of Donner Company showed the following for a particular item that sold at $16 per unit: At the end of January 2014 the records of Donner Company showed the following for a particular item that sold at $16 per unit: At the end of January 2014 the records of Donner Company showed the following for a particular item that sold at $16 per unit: At the end of January 2014 the records of Donner Company showed the following for a particular item that sold at $16 per unit: At the end of January 2014 the records of Donner Company showed the following for a particular item that sold at $16 per unit: At the end of January 2014 the records of Donner Company showed the following for a particular item that sold at $16 per unit: At the end of January 2014 the records of Donner Company showed the following for a particular item that sold at $16 per unit: Transactions Units Amount Inventory January 1 2014 500 $ 2365 Purchase January 12 600 3600 Purchase January 26 160 1280 Sale (370) Sale (250) Required: Required: 1a. Compute Cost of Goods Sold under each method of inventory: average cost FIFO LIFO and specific identification. For specific Compute Cost of Goods Sold under each method of inventory: average cost FIFO LIFO and specific identification. For specific Compute Cost of Goods Sold under each method of inventory: average cost FIFO LIFO and specific identification. For specific Compute Cost of Goods Sold under each method of inventory: average cost FIFO LIFO and specific identification. For specific Compute Cost of Goods Sold under each method of inventory: average cost FIFO LIFO and specific identification. For specific Compute Cost of Goods Sold under each method of inventory: average cost FIFO LIFO and specific identification. For specific Compute Cost of Goods Sold under each method of inventory: average cost FIFO LIFO and specific identification. For specific identification assume that the first sale was selected from the beginning inventory and the second sale was selected from the identification assume that the first sale was selected from the beginning inventory and the second sale was selected from the identification assume that the first sale was selected from the beginning inventory and the second sale was selected from the identification assume that the first sale was selected from the beginning inventory and the second sale was selected from the identification assume that the first sale was selected from the beginning inventory and the second sale was selected from the identification assume that the first sale was selected from the beginning inventory and the second sale was selected from the identification assume that the first sale was selected from the beginning inventory and the second sale was selected from the January 12 purchase. (Round unit price to 2 decimal places. Input all amounts as positive values.) January 12 purchase. (Round unit price to 2 decimal places. Input all amounts as positive values.) January 12 purchase. (Round unit price to 2 decimal places. Input all amounts as positive values.) January 12 purchase. (Round unit price to 2 decimal places. Input all amounts as positive values.) January 12 purchase. (Round unit price to 2 decimal places. Input all amounts as positive values.) Input areas are shaded. Average Cost Cost of Good Available for Sale Cost of Good Available for Sale Cost of Good Available for Sale Cost of Goods Sold Cost of Goods Sold Cost of Goods Sold # of Units Cost per Unit Cost of Goods Available for Sale # of Units Sold Cost per Unit Cost of Goods Sold Beginning inventory Purchases: January 12 2014 January 26 2014 Total FIFO Cost of Goods Available for Sale Cost of Goods Available for Sale Cost of Goods Available for Sale Cost of Goods Sold Cost of Goods Sold Cost of Goods Sold # of Units Cost per Unit Cost of Goods Available for Sale # of Units Sold Cost per Unit Cost of Goods Sold Beginning inventory 500 $0 Purchases: January 12 2014 600 $0 January 26 2014 160 $0 Total 1260 $0 0 LIFO Cost of Goods Available for Sale Cost of Goods Available for Sale Cost of Goods Available for Sale Cost of Goods Sold Cost of Goods Sold Cost of Goods Sold # of Units Cost per Unit Cost of Goods Available for Sale # of Units Sold Cost per Unit Cost of Goods Sold Beginning inventory 500 Purchases: January 12 2014 600 January 26 2014 160 Total 1260 $ 0 $ 4040 Specific Identification Cost of Goods Available for Sale Cost of Goods Available for Sale Cost of Goods Available for Sale Cost of Goods Sold Cost of Goods Sold Cost of Goods Sold # of Units Cost per Unit Cost of Goods Available for Sale # of Units Sold Cost per Unit Cost of Goods Sold Beginning inventory 500 Purchases: January 12 2014 600 January 26 2014 160 Total 1260 $ 0 Required: Required: 2a. FIFO and LIFO which method would result in the higher pretax income? FIFO and LIFO which method would result in the higher pretax income? FIFO and LIFO which method would result in the higher pretax income? FIFO and LIFO which method would result in the higher pretax income? 2b. FIFO and LIFO which would result in the higher EPS? FIFO and LIFO which would result in the higher EPS? FIFO and LIFO which would result in the higher EPS? 3 FIFO and LIFO which method would result in the lower income tax expense? Assume a 30 percent average tax rate. FIFO and LIFO which method would result in the lower income tax expense? Assume a 30 percent average tax rate. FIFO and LIFO which method would result in the lower income tax expense? Assume a 30 percent average tax rate. FIFO and LIFO which method would result in the lower income tax expense? Assume a 30 percent average tax rate. FIFO and LIFO which method would result in the lower income tax expense? Assume a 30 percent average tax rate. FIFO and LIFO which method would result in the lower income tax expense? Assume a 30 percent average tax rate. 4 FIFO and LIFO which method would produce the more favorable cash flow? FIFO and LIFO which method would produce the more favorable cash flow? FIFO and LIFO which method would produce the more favorable cash flow? FIFO and LIFO which method would produce the more favorable cash flow? Show less
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