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Accounting for inventory using the perpetual inventory systemFIFO, LIFO and average cost ...

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Accounting

Accounting for inventory using the perpetual inventory systemFIFO, LIFO and average cost

Athletic Universe began January with inventory of 65 crates of vitamins that cost a total of $3 835. During the month, Athletic Universe purchased and sold merchandise on account as follows:

Jan5

Purchase

145 crates @ $80 each

13

Sale

160 crates @ $96 each

18

Purchase

170 crates @ $90 each

26

Sale

175 crates @ $110 each

Question

1. Prepare a perpetual inventory record using the FIFO inventory costing method, and determine the cost of sales, ending inventory and gross profit.
2. Prepare a perpetual inventory record using the LIFO inventory costing method, and determine the cost of sales, ending inventory and gross profit.
3. Prepare a perpetual inventory record using the average-cost inventory costing method, and determine the cost of sales, ending inventory and gross profit. (Round weighted-average cost per unit to the nearest cent and all other amounts to the nearest dollar.)
4. If the business wanted to pay the least amount of income tax possible, which method would it choose?

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