1.Nelson Framing began March with 73 units of inventory that cost $23 each. During the month, Nelson made the following purchases:
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March 4..................................................
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113 @ $26
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12...................................................
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81 @ 30
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19...................................................
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167 @ 32
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25...................................................
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44 @ 35
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Sales for the month of March shown below:
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March 10 ...............................................
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101 @ $36
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16...................................................
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68 @ 40
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26...................................................
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152@ 42
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28...................................................
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25 @ 45
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The business uses the periodic inventory system.
Required
1. Determine the ending inventory and cost-of-goods-sold amounts for the March financial statements under (a) average cost, (b) FIFO cost, and (c) LIFO cost. Round average cost per unit to the nearest cent and all other amounts to the nearest dollar.
2. How much are the sales revenue for March? Calculate Nelson's gross profit for March under each method.
3. Which method will result in the lowest income taxes for Nelson? Why?