Reference no: EM131213252

Merit Company uses the periodic inventory system. The following may data are for an item in Merritt's inventory:

May 1 beginning inventory, 150 units @ $30 per unit
12 purchased 100 units @ $35 per unit
16 sold 180 units
24 purchased 160 units @ $36 per unit

Calculate the cost of goods sold for May and ending inventory at May 31 using

a. first-in, first-out,
b. last-in, first-out
c. The weighted average cost method.

NOTE: Round your final answers to the nearest dollar

2. inventory costing methods perpetual method

Refer to the information in question one and assumed the perpetual inventory system is used. Calculate the cost of goods sold for May 16 sale using:

a. first-in, first-out
b. last-in, first-out
c. The weighted average cost method.

NOTE: Round your final answers to the nearest dollar

3. Inventory costing methods - periodic method

Chen Sales Corporation uses the periodic inventory system. On January 1, 2012, Chen had 1000 units of product A with a unit cost of $20 per unit. A summary of purchases and sales during 2012 follows

Required

a. Assume that Chen uses the first in, first-out method. Compute the cost of goods sold for 2012 and the ending inventory balance at December 31, 2012, for product A.

b. Assume that Chen uses the last-in, first-out method. Compute the cost of goods sold for 2012 and ending inventory balance at December 31, 2012, for product A.

c. Assume that Chen uses the weighted average cost method. Compute the cost of goods sold for 2012 and the ending inventory balance at December 31, 2012 for product A.

d. assuming that Chen's products are perishable items, which is a three inventory costing methods would you choose to:

1. Reflect the likely goods flow through the business?
2. Minimize income taxes for the period?
3. Report the largest amount of net income for the period?

Explain your answers.