Courtney Company uses a periodic inventory system. The following data were avail

Question

Courtney Company uses a periodic inventory system. The following data were available: beginning inventory, 1,100 units at $25; purchases, 3,300 units at $35; operating expenses (excluding income taxes), $92,000; ending inventory per physical count at December 31, 800 units; sales price per unit, $80; and average income tax rate, 30%. Required 1. Prepare income statements under the FIFO, LIFO, and weighted average costing methods. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount.) Inventory Costing Method Weighted Average Income Statement Sales Revenue Cost of Goods Sold* Gross Profit Operating Expenses Income from Operations Income Tax Expense Net Income Units FIFO LIFO 0 0 0 0 0 0 0

Explanation / Answer

Units Per unit Amount Beginning inventory 1100 25 27500 Purchases 3300 35 115500 Cost of goods available for sale 4400 32.500 143000 Units sold 3600 Ending inventory 800 Ending inventory Units Per unit Amount FIFO 800 35 28000 LIFO 800 25 20000 Weighted average 800 32.500 26000 FIFO LIFO Average Cost of goods available for sale 143000 143000 143000 Less Ending inventory 28000 20000 26000 Cost of goods sold 115000 123000 117000 Income statement FIFO LIFO Average Sales revenue 288000 288000 288000 Cost of goods sold 115000 123000 117000 Gross profit 173000 165000 171000 Operating expense 92000 92000 92000 Income from operations 81000 73000 79000 Income tax expense 30% 24300 21900 23700 Net income 56700 51100 55300 2 a FIFO is preferable as income from operations are more 2 b LIFO as income tax expense is less with less income 3 a LIFO as cost is decreasing so it will increase the profit 3 b FIFO as income will be less here as less income tax expense

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