Problem 8C: Inventory Costing: FIFO, LIFO

Problem 8c: Inventory Costing: FIFO, LIFO

1. The Gagnon Merchandising Corporation began July operations with merchandise inventory of 10 units, each of which cost $85. During July, Gagnon Merchandising made the following purchases: (1) July 5, 25 units @ $86 per unit, (2) July 16, 15 units @ $88 per unit, (3) July 27, 30 units @ $89 per unit. During July the Company sold the following units at a sales price of $150 per unit: July 7, 18 units, July 21, 10 units, July 28, 29 units. Operating expenses in July were $2,700. The Company estimates its income taxes expense will be approximately 35% of income before taxes.

Using the FIFO inventory method, determine the inventory dollar amount on July 1.

A) $890 B) $860 C) $1,500 D) $850 E) $880

Using the FIFO inventory method, determine the dollar amount of purchases made in July.

A) $850 B) $6,140 C) $6,990 D) $10,500 E) $12,000 2

Using the FIFO inventory method, determine the cost of goods available for sale during July.

A) $2,047 B) $850 C) $6,140 D) $1,981 E) $6,990

Using the FIFO inventory method, determine the cost of goods sold during July.

A) $5,009 B) $8,550 C) $4,943 D) $6,990 E) $6,140 3

Using the FIFO inventory method, determine the inventory dollar amount on July 31.

A) $2,047 B) $3,450 C) $1,955 D) $1,981 E) $1,978

Using the FIFO inventory method, determine the sales dollar amount for July.

A) $850 B) $8,550 C) $6,990 D) $6,140 E) $4,943 4

Using the FIFO inventory method, determine the gross profit for July.

A) $6,990 B) $4,943 C) $8,550 D) $3,607 E) $13,493

Using the FIFO inventory method, determine the income before taxes for July.

A) $2,700 B) $6,307 C) $3,607 D) $4,943 E) $907 5

Using the FIFO inventory method, determine the income taxes expense for July.

A) $8,550 B) $907 C) $317 D) $590 E) $3,607

Using the FIFO inventory method, determine the net income for July.

A) $317 B) $590 C) $907 D) $8,550 E) $3,607 6

Using the LIFO perpetual inventory method, determine the inventory dollar amount on July 1.

A) $850 B) $880 C) $890 D) $860 E) $1,500

Using the LIFO perpetual inventory method, determine the dollar amount of purchases made in July.

A) $12,000 B) $850 C) $6,140 D) $6,990 E) $10,500 7

Using the LIFO perpetual inventory method, determine the cost of goods available for sale during July.

A) $1,981 B) $850 C) $6,140 D) $2,047 E) $6,990

Using the LIFO perpetual inventory method, determine the cost of goods sold during July.

A) $4,943 B) $6,990 C) $6,140 D) $5,009 E) $8,550 8

Using the LIFO perpetual inventory method, determine the inventory dollar amount on July 31.

A) $1,981 B) $3,450 C) $2,047 D) $1,955 E) $1,978

Using the LIFO perpetual inventory method, determine the sales dollar amount for July.

A) $850 B) $8,550 C) $6,990 D) $6,140 E) $5,009 9

Using the LIFO perpetual inventory method, determine the gross profit for July.

A) $6,990 B) $5,009 C) $8,550 D) $3,541 E) $13,559

Using the LIFO perpetual inventory method, determine the income before taxes for July.

A) $3,541 B) $5,009 C) $841 D) $2,700 E) $6,241 10

Using the LIFO perpetual inventory method, determine the income taxes expense for July.

A) $841 B) $294 C) $547 D) $3,541 E) $8,550

Using the LIFO perpetual inventory method, determine the net income for July.

A) $841 B) $8,550 C) $3,541 D) $294 E) $547 11

21. The Gagnon Merchandising Corporation's September income statements using the FIFO and LIFO perpetual cost flow assumptions would appear as follows. How much more cash would the Gagnon Merchandising Corporation have available on September 30 if it uses LIFO perpetual instead of FIFO?

Gagnon Merchandising Corporation Income Statements For the Month Ended September 30

LIFO FIFO Perpetual Sales $10,000 $10,000 Cost of Goods Sold $6,200 $6,800 Gross Profit $3,800 $3,200 Operating Expenses $2,800 $2,800 Income Before Taxes $1,000 $400 Income Taxes Expense $350 $140 Net Income $650 $260

A) - $390 B) $390 C) $210 D) $600 E) $0