90.2K

Verified Solution

Link Copied!

PB7-1 Analyzing the Effects of Four Alternative Inventory Methods in a Periodic Inventory System (LO 7- 3] Mojo Industries tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the accounting period, January 31. The inventory's selling price is $10 per unit. Unit Cost $3.00 Total Cost $ 600 Transactions Inventory, January 1 Sale, January 10 Purchase, January 12 Salo, January 17 Purchase, January 26 Units 200 (150) 250 (100) 50 3.50 875 4.50 225 Assume that for Specific identification method the January 10 sale was from the beginning inventory and the January 17 sale was from the January 12 purchase. Required: 1. Compute the amount of goods available for sale, ending inventory, and cost of goods sold at January 31 under each of the following Inventory costing methods: (Round your intermediate calculations to 2 decimal places and final answers to the nearest dollar amount.) Amount of Goods Available for Sale Ending Inventory Cost of Goods Sold $ $ a. Weighted average cost b. First-in, first-out c. Last-in, first-out d. Specific identification 1,700 1,700 1,700 1,700 $ $ 2-a. Of the four methods, which will result in the highest gross profit? Weighted average cost First-in, first-out Last-in, first-out Specific identification 2-b.Of the four methods, which will result in the lowest income taxes? Weighted average cost O First-in, first-out Last-in, first-out Specific identification

Answer & Explanation Solved by verified expert

See Answer