Suppose a division of New York Instruments Incorporated that sells computer microchips has these inventory records for January 2021:
(Click the icon to view the inventory records.)
The company's accounting records show 390 units were sold for revenue of $9,360. Operating expense for January was $2,000.
Read the requirements.
Requirement 1. Prepare the company's January, multistep income statement. Calculate income using the LIFO, average-cost, and FIFO methods. Label the bottom line "Operating income." Round the average cost per unit to three decimal places and all other figures to whole-dollar amounts. Show your computations.
Begin by preparing the income statement using LIFO, then average, and finally FIFO cost.
New York Instruments Incorporated
Income Statement for Microchip
Month Ended January 31, 2021
LIFO
Sales revenue
Cost of goods sold
Gross profit
Operating expenses
Operating income
Data table
Date Item Quantity Unit Cost Total Cost
Jan 1 Beginning inventory 140 units $ 8 1,120
6 Purchase 50 units 14 700
21 Purchase 200 units 16 3,200
27 Purchase 70 units 17 1,190
Print Done
Requirements
1. Prepare the company's January, multistep income statement. Calculate income using the LIFO, average-cost, and FIFO methods. Label the bottom line "Operating income." Round the average cost per unit to three decimal places and all other figures to whole-dollar amounts. Show your computations.
2. Suppose you are the financial vice president of New York Instruments. Which inventory method will you use if your motive is to
a. minimize income taxes?
b. report the highest operating income?
c. report operating income between the extremes of FIFO and LIFO?
d. report inventory on the balance sheet at the most current cost?
e. attain the best measure of net income for the income statement?
State the reason for each of your answers.
Print Done
