Evaluate the 2012 cost of goods sold

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Reference no: EM1376775

Tom Brady Shop began operations on 2^nd January, 2012. The subsequent stock record card for footballs was taken from the records at the end of year.

Date      Voucher   Terms   Units Received Unit Invoice Cost Gross Invoice Amount
1/15      10624         Net                30                  50           $27.00           $1,350
3/15      11437      1/5, net           30                 65             23.00            1,495
6/20        21332     1/10, net          30                90             22.00            1,980
9/12      27644       1/10, net          30                 84            19.00            1,596
11/24    31269       1/10, net          30                  76            18.00            1,368
Total 365 $7,789

A physical inventory on 31^st December, 2012, reveals that 100 footballs were in stock. The bookkeeper informs you that all discounts were taken. Suppose that Tom Brady Shop uses invoice price less discount for recording purchases.

(a) Evaluate the 31^st December, 2012, inventory using FIFO method.

(b) Evaluate the 2012 cost of goods sold using the LIFO method.

(c) Find what method would you recommend to owner to minimize income taxes in 2012, using inventory information for footballs as a guide?

Reference no: EM1376775

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