Inventory Valuation and Earnings Dominick Portet Wines Inc

| March 31, 2017

Question
Hi All, Please see attached. Also can you show how you were able to get the answers? Thanks

Year 1

Year 2

Year 3

Units

$

Units

$

Units

$

Sales

170

220

300

Purchases

250

@

$10

200

@

$8

?

@

15

LIFO ending inventory

80

@

$10

60

@

$10

Assume that Portet Wines uses the LIFO method of inventory valuation. The purchase amount for Year 3 has been left blank because Portet Wines has not yet decided the total number of units to purchase during the year. (Assume that all sales occur on the last day of the year, after all purchases for the year have been made. The company’s year-end is December 31.)

Required

Assume Portet Wines uses FIFO instead of LIFO and the company purchased just enough units to meet sales demand. What would the cost of goods sold be in Year 3?
Assume that FIFO ending inventory is equal to 80 units at $10 in Year 1 and 60 units at $8 in Year 2.

Inventory Valuation and Earnings
Dominick Portet Wines Inc. began operations to import fine wines from Australia to the United States. Sales and purchase information is provided below.

Year 1

Year 2

Year 3

Units

$

Units

$

Units

$

Sales

170

220

300

Purchases

250

@

$10

200

@

$8

?

@

15

LIFO ending inventory

80

@

$10

60

@

$10

Assume that Portet Wines uses the LIFO method of inventory valuation. The purchase amount for Year 3 has been left blank because Portet Wines has not yet decided the total number of units to purchase during the year. (Assume that all sales occur on the last day of the year, after all purchases for the year have been made. The company’s year-end is December 31.)

Required

How many units should be purchased in Year 3 if the firm’s objective is to maximize reported income for the year?

Answer

Compute the cost of goods sold for Year 3 assuming the number of units computed in (1) is purchased.

$Answer

How many units should be purchased in Year 3 if the firm’s objective is to minimize income taxes for the year?

Answer

Compute the cost of goods sold for Year 3 assuming the number of units computed in (3) is purchased.

$Answer

Assume Portet Wines uses FIFO instead of LIFO and the company purchased just enough units to meet sales demand. What would the cost of goods sold be in Year 3?

Assume that FIFO ending inventory is equal to 80 units at $10 in Year 1 and 60 units at$8 in Year 2.

Get a 30 % discount on an order above $ 50
Use the following coupon code:
COCONUT
Order your essay today and save 30% with the discount code: COCONUTOrder Now
Positive SSL