Question

Inventory Costing Methods-Periodic System The following information is available concerning the inventory of Carter Inc.: Units Unit Cost 193 $10 Beginning inventory Purchases: March 5 297 11 June 12 398 12 251 13 153 15 August 23 October 2 During the year, Carter sold 994 units. It uses a periodic inventory system. Required: 1. Calculate ending inventory and cost of goods sold for each of the following three methods: In your calculations round average unit cost to the nearest cent, and round all other calculations and your final answers to the n Cost Flow Assumption Ending Inventory Cost of Goods Sold a. Weighted average b. FIFO C. LIFO 2. Assume an estimated tax rate of 30%. How much more or less (indicate which will Carter pay in taxes by using FIFO instead Difference in taxes under FIFO VS. LIFO More Does this amount represent more or less taxes paid using FIFO? 3. Assume that Carter prepares its financial statements in accordance with IFRS. Which costing method should it use to pay the Weighted average →

Answer 1

FIFO Cost of goods Available for sale Cost of goods available for Units Per Unit sale 193 10 1930 Cost of goods sold FIFO Cost of goods Units Per unit sold 193 10 1930 11 Ending Inventory- Periodic FIFO Ending Inventor Units Per Unity 0 10 0 $ $ 0 11 0 0 12 0 145 13 1885 153 15 2295$ 298 4180 $ 3267 Beginning Inventory Purchases March 5 June 12 August 23 October 2 Total 11 12 4776 297 398 251 153 1292 297 398 106 12 3267 4776 1378 13 13 15 3263 2295 15531 0 15 0 994 11351 LIFO Cost of goods Available for sale Cost of goods available for Units Per Unit sale 193 10 1930 Beginning Inventory Purchases March 5 June 12 August 23 October 2 Total Cost of goods sold LIFO Ending Inventory- Periodic LIFO Cost of Ending goods Inventor Units Per unit sold Units Per Unit V 0 10 0 193 10 1930$ $ 192 11 2112 105 11 1155 398 12 4776 0 12 0 251 13 3263 0 13 0 153 15 2295 0 15 o $ 994 12446 298 3085$ 297 398 251 153 1292 11 12 13 3267 4776 3263 2295 15531 15 Average Cost Cost of goods Available for sale Cost of goods available for Units Per Unit sale 193 10 1930 Cost of goods sold Average Cost Ending Inventory- Average Cost Cost of Ending goods Inventor Units Per unit Units Per Unit V sold Beginning Inventory Purchases March 5 June 12 August 23 October 2 Total 11 12 297 398 251 153 1292 13 3267 4776 3263 2295 15531 15 12.02 994 12.021 11949 298 12.02 3582 $ Particulars a Weighted Average b FIFO CLIFO Cost of Ending goods Inventory sold 3582 11949 4180 11351 | $ 3085 12446 $ FIFO LIFO Cost Of goods sold 11351 12446 Tax rate 30 30 More Amount 3405.31 $ 3733.8$ 328.5$

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