Solution-Determine the difference in the amount of income

Determine the difference in the amount of income

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Question - Morton Company uses the periodic inventory method and had the following inventory information available:

	Units	Unit Cost	Total Cost
1/1 Beginning Inventory	100	$4	$400
1/20 Purchase	400	$5	2,000
7/25 Purchase	200	$7	1,400
10/20 Purchase	300	$8	2,400
	1,000		$6,200

A physical count of inventory on December 31 revealed that there were 400 units on hand.

Required - Answer the following independent questions and show computations supporting your answers.

1. Assume that the company uses the FIFO method. The value of the ending inventory at December 31 is $__________.

2. Assume that the company uses the Average-Cost method. The value of the ending inventory on December 31 is $__________.

3. Assume that the company uses the LIFO method. The value of the ending inventory on December 31 is $__________.

4. Determine the difference in the amount of income that the company would have reported if it had used the FIFO method instead of the LIFO method. Would income have been greater or less?

Reference no: EM132793268

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Determine the difference in the amount of income

Reference no: EM132793268

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