Answer:
(a) $6,200
(b) -$2,300
(c) $828
Explanation:
STEP 1:
Calculating Cost of Goods sold under required methods as follows;
FIFO Method:
April 15, Sale 2,300 units at $67 each, Cost of Goods Sold can be calculated as follows;
(1,500 x $22) + (800 x $23) = $51,400
October 31, Sale 6,500 units at $70 each, Cost of Goods Sold can be calculated as follows;
6,500 x $23 = $149,500
Total Cost of Goods Sold = $51,400 + $149,500 = $200,900
LIFO method:
April 15, Sale 2,300 units at $67 each, Cost of Goods Sold can be calculated as follows;
2,300 x $25 = $57,500
October 31, Sale 6,500 units at $70 each, Cost of Goods Sold can be calculated as follows;
(1,200 x $25) + (5,300 x $23) = $151,900
Total Cost of Goods Sold = $57,500 + $151,900 = $209,400
Weighted Average Cost Method:
Total Cost = (1,500 x $22) + (7,500 x $23) + (3,500 x $25) = $293,000
Total Units = 1,500 + 7,500 + 3,500 = 12,500
weighted average cost = $293,000 / 12,500 = 23.44 per unit.
April 15, Sale 2,300 units at $67 each, Cost of Goods Sold can be calculated as follows;
2,300 x $23.44 = $53,912
October 31, Sale 6,500 units at $70 each, Cost of Goods Sold can be calculated as follows;
6,500 x $23.44 = $152,360
Total Cost of Goods Sold = $53,912 + $152,360 = $206,272
STEP 2:
Calculating the Total sales $ amount as follows;
Total Sales = (2,300 x $67) + (6,500 x $70) = $609,100
STEP 3:
Preparing Income Statement under all the required methods;
(a) Income Statement under FIFO Method:
Sales $609,100
Less: Cost of Goods Sold $200,900
Gross Profit $408,200
Less: Operating expenses $402,000
Net Income before Income Tax $6,200
(b) Income Statement under LIFO Method:
Sales $609,100
Less: Cost of Goods Sold $209,400
Gross Profit $399,700
Less: Operating expenses $402,000
Net Loss before Income Tax -$2,300
(c) Income Statement under weighted average cost Method:
Sales $609,100
Less: Cost of Goods Sold $206,272
Gross Profit $402,828
Less: Operating expenses $402,000
Net Income before Income Tax $828
