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Dymac Appliances uses the periodic inventory system. Details regarding the inventory of appliances at November 1, 2013, purchases invoices during the next 12 months, and the inventory count at October 31, 2014, are summarized as follows:
Dymac Appliances uses the periodic inventory system. Details regarding the
Instructions
1. Determine the cost of the inventory on October 31, 2014, by the first-in, first-out method. Present data in columnar form, using the following headings:
Model Quantity Unit Cost Total Cost
If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase.
2. Determine the cost of the inventory on October 31, 2014, by the last-in, first-out method, following the procedures indicated in (1).
3. Determine the cost of the inventory on October 31, 2014, by the weighted average cost method, using the columnar headings indicated in (1).
4. Discuss which method (FIFO or LIFO) would be preferred for income tax purposes in periods of
(a) Rising prices
(b) Decliningprices.
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