The Midori Cabinet Company sold 2,200 cabinets during 20×7 at $160 per cabinet.
The Midori Cabinet Company sold 2,200 cabinets during 20×7 at $160 per cabinet. Its beginning inventory on January 1 was 130 cabinets at $56. Purchases made during the year were as follows:February225 cabinets @ $62April350 cabinets @ $65June700 cabinets @ $70August300 cabinets @ $66October400 cabinets @ $68November250 cabinets @ $72The company’s selling and administrative expenses for the year were $101,000. The company uses the periodic inventory system. Required1. Prepare a schedule to compute the cost of goods available for sale.2. Compute income before income taxes under each of the following inventory cost flow assumptions: (a) the average-cost method, (b) the FIFO method, and (c) the LIFO method.3. User Insight: Compute inventory turnover and days’ inventory on hand under each of the inventory cost flow assumptions in requirement 2. What conclusion can you draw from this comparison?