Hansen Company Uses the Periodic Inventory Method and Had the Following

question 92

Short Answer

Hansen Company uses the periodic inventory method and had the following inventory information available: A physical count of inventory on December 31 revealed that there were 380 units on hand.
Instructions
Answer the following independent questions and show computations supporting your answers.
1. Assume that the company uses the FIFO method. The value of the ending inventory at December 31 is $__________.
2. Assume that the company uses the average cost method. The value of the ending inventory on December 31 is $__________.
3. Assume that the company uses the LIFO method. The value of the ending inventory on December 31 is $__________.
4. Determine the difference in the amount of income that the company would have reported if it had used the FIFO method instead of the LIFO method. Would income have been greater or less?

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Definitions:

Annually

Occurring every year or pertaining to a period of one year.

Consumer Credit-Card Rate

The interest rate that banks charge consumers on the balances they carry on their credit cards.

Prime Rate

The interest rate that commercial banks charge their most creditworthy customers, often used as a benchmark in lending rates.

Economic Resource

Any resource used by humans to produce goods or services, including labor, capital, land, and entrepreneurship.