Inventory Costing Methods—Periodic System The following information is available concerning the inventory of Carter Inc.: Units Unit Cost Beginning inventory 202 $9 Purchases: March...

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Accounting

Inventory Costing Methods—Periodic System
The following information is available concerning the inventoryof Carter Inc.:
Units Unit Cost
Beginning inventory 202 $9
Purchases:
   March 5 297 10
   June 12 401 11
   August 23 254 12
   October 2 153 14
During the year, Carter sold 1,015 units. It uses a periodicinventory system.
Required:
1. Calculate ending inventory and cost of goodssold for each of the following three methods:
In your calculations round average unit cost to the nearestcent, and round all other calculations and your final answers tothe nearest dollar.
Cost Flow Assumption Ending Inventory Cost of Goods Sold
a. Weighted average $ $
b. FIFO $ $
c. LIFO $ $
2. Assume an estimated tax rate of 30%. Howmuch more or less (indicate which) will Carter pay in taxes byusing FIFO instead of LIFO?
Difference in taxes under FIFO vs. LIFO $
Does this amount represent more or less taxes paid usingFIFO?
3. Assume that Carter prepares its financialstatements in accordance with IFRS. Which costing method should ituse to pay the least amount of taxes?

Answer & Explanation Solved by verified expert

3.6 Ratings (658 Votes)

Solution 1 Computation of COGS and ending inventory Periodic Weighted Average cost method Particulars Cost of goods available for sale Cost of goods sold Average cost Ending Inventory Average cost Nos of units Unit Cost Cost of goods available for sale Nos of units sold Unit Cost Cost of goods sold Nos of units in ending inventory Unit Cost Ending inventory Beginning inventory 202 900 1818 See Answer

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	Units	Unit Cost
Beginning inventory	202	$9
Purchases:
March 5	297	10
June 12	401	11
August 23	254	12
October 2	153	14

Cost Flow Assumption	Ending Inventory	Cost of Goods Sold
a. Weighted average	$	$
b. FIFO	$	$
c. LIFO	$	$

Difference in taxes under FIFO vs. LIFO	$
Does this amount represent more or less taxes paid usingFIFO?