William Company Uses the Periodic Inventory System and Has Provided

question 19

Short Answer

William Company uses the periodic inventory system and has provided the following data:
$$\begin{array} { l r r } & \text { Units } & \text { Amount } \\\text { Beginning inventory } & 6,000 & \$ 30,000 \\\text { Purchases } & 32,000 & 192,000 \\\text { Sales } & 28,000 & 280,000\end{array}$$ Requirement 1:
Calculate the following using both FIFO and LIFO inventory methods. $\begin{array}{ll} & \$ \text { FIFO } & \$ \text { LIFO } \\\text { A. Ending inventory }& \$----& \$----\\\text { B. Cost of Goods Sold }& \$----& \$----\\\text { C. Gross margin }& \$----& \$----\\\end{array}$ Requirement 2:
Conceptually,how does pretax income using FIFO (in times of rising prices)compare to LIFO pretax income? Explain your answer.

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Definitions:

Gross Profit Percentage

A financial metric indicating the proportion of money left over from revenues after accounting for the cost of goods sold, expressed as a percentage.

Undervalued Inventory

Inventory that is reported at a value lower than its actual market value, potentially affecting financial statements and tax liabilities.

Cost Method

An accounting method used to value an investment, based on the cost to acquire it, without considering its fair market value changes.

Voting Shares

Shares that grant the holder the right to vote on corporate matters, typically related to company governance.