Irish Company Uses the Periodic Inventory System and Had the Following

question 58

Essay

Irish Company uses the periodic inventory system and had the following inventory information available: A physical count of inventory on December 31 revealed that there were 480 units on hand.
Instructions
1. Assume that the company uses the FIFO method. The cost of the ending inventory at December 31 is $__________.
2. Assume that the company uses the Average-Cost method. The cost of the ending inventory on December 31 is $__________.
3. Assume that the company uses the LIFO method. The cost of the ending inventory on December 31 is $__________.
4. Determine the difference in the amount of gross profit that the company would have reported if it had used the FIFO method instead of the LIFO method. Would gross profit have been greater or less?

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Definitions:

Canceled Account Balance

The remaining amount of money in an account that has been closed or terminated.

Collection Letters

Written notices sent by creditors to debtors requesting payment of overdue balances.

Overlooked

Failed to be noticed or considered; omitted due to inattention.

Delinquent Balances

Unpaid amounts of money that are past due and have not been settled within the agreed time frame.