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Inventory Cost Flows and Net Income

Dave's Electronics had the following inventory transactions
during January:

Jan. 1: Beginning Inventory 1,500 units @ $9 each = $13,500
Jan. 15: Purchase 2,000 units @ $8 each = $16,000
Jan. 21: Sold 2,700 units @ $12 each
Jan. 22: Purchase 3,000 units @ $7 each = $21,000
Jan. 30: Sold 2,000 units @ $12 each

a) Assume the company applies Moving Weighted Average inventory
costing in a perpetual inventory system. Calculate the dollar value for
cost of goods sold. Round calculations to the nearest whole cent.

b) Record the January sale. Assume all sales are on credit.

Date Account Titles and Explanation Debit Credit

c) Calculate the net income (loss) for the month of January assuming
operating expenses were $7,500.

d) If Dave's Electronics is experiencing deflation with it's inventory
purchases, which inventory costing method will provide the highest
net income? Explain.


Solution Summary

The solution examines inventory cost flows for Dave's electronics.