Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN: 9781337690881
Author: Jay Rich, Jeff Jones
Publisher: Cengage Learning
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(613 Computing Cost of Goods Sold and Ending Inventory Uinder FIFo, LIFO, and Average Cost
Computing Cost of Goods Sold and Ending Inventory Under
16-
Assume that Madden Company reports the following initial balance and subsequent purcha
inventorv.
Inventory balance at beginning of year ......1,300 units$150 each $195,000
Inventory purchased during the year 1,700 units $180 each 306,000
Cost of goods available for sale during the year..... 3,000 units
$501,000
Assume that 2,000 units are sold during the year. Compute the cost of goods sold for the year and th
inventory on the year-end balance sheet under the following inventory costing methods:
a. FIFO
b. LIFO
c. Average Cost
M6-14. Computing Cost of Goods Sold and Ending Inventory Under FIFO, LIFO, and Average Cos
Wong Corporation reports the following beginning inventory and inventory purchases.
400 units $12 each 4,800
Inventory balance at beginning of year .
Inventory purchased during the year 700 units@$14 each
Cost of goods available for sale during the year .....1,100 units
9,800
$14,600
Wong sells 600 of its inventory units during the year. Compute the cost of goods sold for the year
the inventory on the year-end balance sheet under the following inventory costing methods:
and
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Transcribed Image Text:(613 Computing Cost of Goods Sold and Ending Inventory Uinder FIFo, LIFO, and Average Cost Computing Cost of Goods Sold and Ending Inventory Under 16- Assume that Madden Company reports the following initial balance and subsequent purcha inventorv. Inventory balance at beginning of year ......1,300 units$150 each $195,000 Inventory purchased during the year 1,700 units $180 each 306,000 Cost of goods available for sale during the year..... 3,000 units $501,000 Assume that 2,000 units are sold during the year. Compute the cost of goods sold for the year and th inventory on the year-end balance sheet under the following inventory costing methods: a. FIFO b. LIFO c. Average Cost M6-14. Computing Cost of Goods Sold and Ending Inventory Under FIFO, LIFO, and Average Cos Wong Corporation reports the following beginning inventory and inventory purchases. 400 units $12 each 4,800 Inventory balance at beginning of year . Inventory purchased during the year 700 units@$14 each Cost of goods available for sale during the year .....1,100 units 9,800 $14,600 Wong sells 600 of its inventory units during the year. Compute the cost of goods sold for the year the inventory on the year-end balance sheet under the following inventory costing methods: and
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  • ( Appendix 6B) Inventory Costing Methods Grencia Company uses a periodic inventory system. For 2018 and 2019, Grencia has the following data (assume all purchases and sales are for cash): Required: 1. Compute cost of goods sold, the cost of ending inventory, and gross margin for each year using FIFO. 2. Compute cost of goods sold, the cost of ending inventory, and gross margin for each year using LIFO. 3. Compute cost of goods sold, the cost of ending inventory, and gross margin for each year using the average cost method. ( Note: Use four decimal places for per unit calculations and round all other numbers to the nearest dollar.) 4. CONCEPTUAL CONNECTION Which method would result in the lowest amount paid for taxes? 5. CONCEPTUAL CONNECTION Which method produces the most realistic amount for income? For inventory? Explain your answer. 6. CONCEPTUAL CONNECTION What is the effect of purchases made later in the year on the gross margin when LIFO is employed? When FIFO is employed? Be sure to explain why any differences occur. 7. CONCEPTUAL CONNECTION If you worked Problem 6-68B, compare your answers. What are the differences? Be sure to explain why any differences occurred.
    ( Appendices 6A and 6B) Inventory Costing Methods Edwards Company began operations in February 2019. Edwards accounting records provide the following data for the remainder of 2019 for one of the items the company sells: Â Edwards uses a periodic inventory system. All purchases and sales were for cash. Required: 1. Compute cost of goods sold and the cost of ending inventory using FIFO. 2. Compute cost of goods sold and the cost of ending inventory using LIFO. 3. Compute cost of goods sold and the cost of ending inventory using the average cost method. ( Note: Use four decimal places for per-unit calculations and round all other numbers to the nearest dollar.) 4. Prepare the journal entries to record these transactions assuming Edwards chooses to use the FIFO method. 5. CONCEPTUAL CONNECTION Which method would result in the lowest amount paid for taxes? 6. CONCEPTUAL CONNECTION Refer to Problem 6-67B and compare your results. What are the differences? Be sure to explain why the differences occurred.
    Perpetual inventory using LIFO Beginning inventory, purchases, and sales for Item 88-HX are as follows: July 1 Inventory 90 units at 54 8 Sale 75 units 15 Purchase 125 units at 60 27 Sale 80 units Assuming a perpetual inventory system and using the last-in, first-out (LIFO) method, determine (A) the cost of goods sold on July 27 and (B) the inventory on July 31.
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