Accounting for inventory using the perpetual inventory system-FIFO, LIFO, and Weighted-Average
Pit World began January with merchandise inventory of 80 crates of vitamins that cost a total of 84,000. During the month, Fit World purchased and sold merchandise on account as follows:
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Jan. 5
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Purchase
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140 crates @ $ 55 each
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13
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Sale
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160 crates @ $100 each
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18
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Purchase
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160 crates @ $ 60 each
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26
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Sale
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170 crates @ $110 each
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Requirements
1. Prepare a perpetual inventory record, using the FIFO inventory costing method, and determine the company's cost of goods sold, ending merchandise inventory, and gross profit.
2. Prepare a perpetual inventory record, using the LIFO inventory costing method, and determine the company's cost of goods sold, ending merchandise inventory, and gross profit.
3. Prepare a perpetual inventory record, using the weighted-average inventory costing method, and determine the company's cost of goods sold, ending merchandise 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 taxes possible, which method would it choose?