Martinez Inc. is trying to determine whether to use the FIFO or average cost formula. The...

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Accounting

Martinez Inc. is trying to determine whether to use the FIFO oraverage cost formula. The accounting records show the followingselected inventory information:
Purchases
Cost of Goods Sold
Ending Inventory
Date
Units
Cost
Total
Units
Cost
Total
Units
Cost
Total
Oct.
2
8,100
$11
$89,100
8,100
$11
$89,100
15
13,500
13
175,500
[1]
[2]
[3]
[4]
[5]
29
20,800
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[13]

The company accountant has prepared the following partial statementof income to help management understand the financial statementimpact of each cost determination cost formula.
FIFO
Average
Sales
$502,000 $502,000
Cost of goods sold
Gross profit
Operating expenses
216,000 216,000
Income before income tax
Income tax expense (30%)
Net income

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Transcribed Image Text

Martinez Inc. is trying to determine whether to use the FIFO oraverage cost formula. The accounting records show the followingselected inventory information:PurchasesCost of Goods SoldEnding InventoryDateUnitsCostTotalUnitsCostTotalUnitsCostTotalOct.28,100$11$89,1008,100$11$89,1001513,50013175,500[1][2][3][4][5]2920,800[6][7][8][9][10][11][12][13]The company accountant has prepared the following partial statementof income to help management understand the financial statementimpact of each cost determination cost formula.FIFOAverageSales$502,000$502,000Cost of goods soldGross profitOperating expenses216,000216,000Income before income taxIncome tax expense (30%)Net income

		Purchases			Cost of Goods Sold			Ending Inventory
Date		Units	Cost	Total	Units	Cost	Total	Units	Cost	Total
Oct.	2	8,100	$11	$89,100				8,100	$11	$89,100
	15	13,500	13	175,500				[1]	[2]
								[3]	[4]	[5]
	29				20,800
					[6]	[7]
					[8]	[9]	[10]	[11]	[12]	[13]

	FIFO	Average
Sales	$502,000	$502,000
Cost of goods sold
Gross profit
Operating expenses	216,000	216,000
Income before income tax
Income tax expense (30%)
Net income