Easy Use Electronic Center began October with 80 units of merchandise inventory that cost $57…
Easy Use Electronic Center began October with 80 units of merchandise inventory that cost $57 each. During October, the store made the following purchases:
Easy Use uses the periodic inventory system, and the physical count at October 31 indicates that 115 units of merchandise inventory are on hand.
1. Determine the ending merchandise inventory and cost of goods sold amounts for the October financial statements using the FIFO, LIFO, and weighted average inventory costing methods.
2. Sales revenue for October totaled $30,000. Compute Easy Uses’ gross profit for October using each method.
3. Which method will result in the lowest income taxes for Easy Use? Why? Which method will result in the highest net income for Easy Use? Why?