I need help with the below problem I highted the area of which I need help with
ID: 2445584 • Letter: I
Question
I need help with the below problem I highted the area of which I need help with
Requirements 1. Prepare a partial income statement through gross profit under the average, FIFO, and LIFO methods. Round average cost per unit to four decimal places and all other amounts to the nearest whole dollar. 2. Which inventory method would you use to minimize income tax? Explain why this method causes income tax to be the lowest. Requirement 1. Prepare a partial income statement through gross profit under the average, FIFO, and LIFO methods. Round average cost per unit to four decimal places and all other amounts to the nearest whole dollar.Explanation / Answer
FIFO Average Cost Sales revenue 1,16,064 1,16,064 Cost of Goods Sold 59,400 59,644 Gross Profit 1,16,064 56,420 See workings Date transaction Unit Rate Cost Aug-01 opening balancebalance 600 5.5 3300 Nov-05 Purchase 500 7.2 3600 Jan-24 Purchase 7000 7.5 52500 Apr-08 Purchase 900 8 7200 9000 66600 Average cost (66600/9000) 7.4 Number of unit sold (59,644/7.4) 8060 Closing inventory (9000-8060) 940 As per FIFO Cost of goods sosld Aug-01 opening balancebalance 600 5.5 3300 Nov-05 Purchase 500 7.2 3600 Jan-24 Purchase 6960 7.5 52500 8060 59400