Problem:
Model Inventory Purchase Invoices Inventory Costs
Jan 1 1st 2nd 3rd Dec 31st
BB900 27 at $213 21 at $215 18 at $222 18 at $225 30
C911 10 at 60 6 at 65 2 at 65 2 at 70 4
L100 6 at 305 3 at 310 3 at 316 4 at 317 4
N201 2 at 520 2 at 527 2 at 530 2 at 535 4
Q73 6 at 520 8 at 531 4 at 549 6 at 542 7
Z120 4 at 222 4 at 232 2
ZZRF 8 at 70 12 at 72 16 at 74 14 at 78 12
Question 1. Determine the cost of inventory on December 31, 2010 by the FIFO method. Present he columnar form, using the following headings:
Model, Quantity, Unit Cost, Total Cost
If the inventory of a particular model comprises one entire purchase plus a portion of another purchae acquired at a different unit cost, use a separate line for each purchase.
Question 2. Determine the cost of the inventory on December 31, 2010 by the LIFO method
Question 3. Determine the cost of the inventory on December 31, 2010 by the average cost method. using the columnar headings indicated in (1)
Question 4. Discuss which method (FIFO and LIFO) would be preferred for income tax purposes in periods of (a) rising prices (b) declining prices.