Dymac Appliances uses the periodic inventory system. Details regarding the inventory of appliances at January 1, purchases invoices during the next 12 months, and the inventory count at December 31 are summarized as follows: Purchases Invoices Inventory Count, October 31 Inventory, November 1 Model 2nd 1st Зrd 4 at $ 64 4 at $ 70 4 at $ 76 A10 8 at $176 B15 4 at 158 3 at 170 6 at 184 15 at 9 at 3 at 3 at E60 75 65 68 70 5 7 at 242 5 at 260 G83 6 at 250 10 at 259 J34 12 at 240 10 at 246 16 at 267 16 at 270 15 2 at 110 2 at 108 M90 3 at 128 3 at 130 7 at 180 5 at 160 4 at 170 Q70 4 at 175 Instructions 1. Determine the cost of the inventory on December 31 by the first-in, first-out method. Present data in columnar form, using the following headings: Model Quantity Unit Cost Total Cost If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase. 2. Determine the cost of the inventory on December 31 by the last-in, first-out method, following the procedures indicated in (1). 3. Determine the cost of the inventory on December 31 by the weighted average cost method, using the columnar headings indicated in (1). 4. Discuss which method (FIFO or LIFO) would be preferred for income tax purposes in periods of (a) rising prices and (b) declining prices.
Dymac Appliances uses the periodic inventory system. Details regarding the inventory of appliances at January 1, purchases invoices during the next 12 months, and the inventory count at December 31 are summarized as follows: Purchases Invoices Inventory Count, October 31 Inventory, November 1 Model 2nd 1st Зrd 4 at $ 64 4 at $ 70 4 at $ 76 A10 8 at $176 B15 4 at 158 3 at 170 6 at 184 15 at 9 at 3 at 3 at E60 75 65 68 70 5 7 at 242 5 at 260 G83 6 at 250 10 at 259 J34 12 at 240 10 at 246 16 at 267 16 at 270 15 2 at 110 2 at 108 M90 3 at 128 3 at 130 7 at 180 5 at 160 4 at 170 Q70 4 at 175 Instructions 1. Determine the cost of the inventory on December 31 by the first-in, first-out method. Present data in columnar form, using the following headings: Model Quantity Unit Cost Total Cost If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase. 2. Determine the cost of the inventory on December 31 by the last-in, first-out method, following the procedures indicated in (1). 3. Determine the cost of the inventory on December 31 by the weighted average cost method, using the columnar headings indicated in (1). 4. Discuss which method (FIFO or LIFO) would be preferred for income tax purposes in periods of (a) rising prices and (b) declining prices.
Financial Accounting
15th Edition
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter7: Inventories
Section: Chapter Questions
Problem 5PA: Dymac Appliances uses the periodic inventory system. Details regarding the inventory of appliances...
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Transcribed Image Text:Dymac Appliances uses the periodic inventory system. Details regarding the inventory of
appliances at January 1, purchases invoices during the next 12 months, and the inventory
count at December 31 are summarized as follows:
Purchases Invoices
Inventory Count,
October 31
Inventory,
November 1
Model
2nd
1st
Зrd
4 at $ 64
4 at $ 70
4 at $ 76
A10
8 at $176
B15
4 at 158
3 at 170
6 at 184
15 at
9 at
3 at
3 at
E60
75
65
68
70
5
7 at 242
5 at 260
G83
6 at 250
10 at 259
J34
12 at 240
10 at 246
16 at 267
16 at 270
15
2 at 110
2 at 108
M90
3 at 128
3 at 130
7 at 180
5 at 160
4 at 170
Q70
4 at 175
Instructions
1. Determine the cost of the inventory on December 31 by the first-in, first-out method.
Present data in columnar form, using the following headings:
Model
Quantity
Unit Cost
Total Cost
If the inventory of a particular model comprises one entire purchase plus a portion of
another purchase acquired at a different unit cost, use a separate line for each purchase.
2. Determine the cost of the inventory on December 31 by the last-in, first-out method,
following the procedures indicated in (1).
3. Determine the cost of the inventory on December 31 by the weighted average cost
method, using the columnar headings indicated in (1).
4.
Discuss which method (FIFO or LIFO) would be preferred for income tax
purposes in periods of (a) rising prices and (b) declining prices.
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