Solution-Prepare an income statement up to gross profit for

Prepare an income statement up to gross profit for december

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Reference no: EM132090510

Problem - The following information relates to the inventory of Harry's Hardware during the month of December:

	Units	Unit cost	Total cost
Dec. 1 Beginning inventory	500	$5.00	$2,500
10 Purchases	500	5.30	2,650
23 Purchases	600	5.60	3,360
	1600		$8,150

Harry's Hardware uses the periodic inventory system. During the month, 700 units were sold for $6300. A physical stock take on 31 December verified that 590 units were on hand. Ignore GST.

REQUIRED:

A. Prepare an income statement up to gross profit for December using each of the following costing methods:

Specific identification, assuming that 300 units were sold from the beginning inventory and 400 units were sold from the first purchase
FIFO
LIFO
Weighted average

B. Which cost flow method resulted in the highest gross profit on sales? The highest ending inventory? Explain why your results differ?

Reference no: EM132090510

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Prepare an income statement up to gross profit for december

Reference no: EM132090510

Reference no: EM132090510

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