(BQ) Part 2 book "Financial accounting" has contents: Completing the operating cycle, analyzing financial statements, statement of cash flows, investments - debt and equity securities, financing - long term liabilities,. and other contents. | Required: 1. Determine the amounts for ending inventory, cost of goods sold, and gross margin under the following costing alternatives. Use the perpetual inventory method. Round amounts to the nearest dollar. a. FIFO b. LIFO c. Average cost (calculate unit costs to the nearest cent) 2. Interpretive Question: Which alternative results in the highest gross margin? Why? LO 9 Unifying Concepts: Inventory Estimation Method McCarlie Clothing Store has the following information available: P 7-79 Purchases during March 2012 . . . . . . . . . . . . . . . . . . . . . Inventory balance, March 1, 2012 . . . . . . . . . . . . . . . . . . Sales during March . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Average gross margin rate for the last three years. . . . . . . Cost Selling Price $250,000 75,000 $400,000 115,000 550,000 Other 52% Required: 1. On the basis of this information, estimate the cost of inventory on hand at March 31, 2012, using the gross margin method. 2. How accurate do you think this method is? Inventory and the Cost of Sales Chapter 7 329 8 Completing the Operating Cycle After studying this chapter, you should be able to: L EA R N I N G O B J E C T I V E S LO1 Account for the various components of employee compensation expense. In addition to wages and salaries, companies also compensate their employees through bonuses, stock options, pensions, and other benefits. Computing total compensation expense involves a significant element of estimation and assumption. L O Compute income tax expense, including appropriate consideration of deferred tax items. Reported income tax expense reflects all of the tax implications of transactions and events occurring during the year. Because financial accounting rules and income tax rules are not the same, income tax expense this year sometimes reflects items that will not actually impact the legal computation of income taxes until future years. 2 L O Distinguish between contingent items .
