E7-15 (Algo) Analyzing and Interpreting the Effects of the LIFO/FIFO Choice on Inventory Turnover Rat LO7-5, 7-6 The records at the end of January of the current year for Young Company showed the following for a particular kind of merchandise. Beginning Inventory at FIFO: 16 Units @ $19 = $304 Beginning Inventory at LIFO: 16 Units @ $15 = $240 January Transactions Purchase, January 9 Purchase, January 20 Sale, January 21 (at $39 per unit) Sale, January 27 (at $40 per unit) Units 28 50 36 26 Unit Cost $17 22 Total Cost $ 476 1,100 Required: 1. Compute the inventory turnover ratio for the month of January under the FIFO and LIFO inventory costing methods. 2. Which costing method is the more accurate indicator of the efficiency of inventory management?

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Chapter18: Accounting Periods And Methods
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E7-15 (Algo) Analyzing and Interpreting the Effects of the LIFO/FIFO Choice on Inventory Turnover Ratio
LO7-5, 7-6
The records at the end of January of the current year for Young Company showed the following for a particular kind of merchandise:
Beginning Inventory at FIFO: 16 Units @ $19 = $304
Beginning Inventory at LIFO: 16 Units @ $15 = $240
January Transactions
Purchase, January 9
Purchase, January 20
Sale, January 21 (at $39 per unit)
Sale, January 27 (at $40 per unit)
Units
28
50
36
26
Unit
Cost
$17
22
Total Cost
$ 476
1,100
Required:
1. Compute the inventory turnover ratio for the month of January under the FIFO and LIFO inventory costing methods.
2. Which costing method is the more accurate indicator of the efficiency of inventory management?
FIFO Inventory turnover ratio
LIFO Inventory turnover ratio
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Compute the inventory turnover ratio for the month of January under the FIFO and LIFO inventory costing methods. (Do not
round intermediate calculations and round your final answers to 2 decimal places.)
Transcribed Image Text:E7-15 (Algo) Analyzing and Interpreting the Effects of the LIFO/FIFO Choice on Inventory Turnover Ratio LO7-5, 7-6 The records at the end of January of the current year for Young Company showed the following for a particular kind of merchandise: Beginning Inventory at FIFO: 16 Units @ $19 = $304 Beginning Inventory at LIFO: 16 Units @ $15 = $240 January Transactions Purchase, January 9 Purchase, January 20 Sale, January 21 (at $39 per unit) Sale, January 27 (at $40 per unit) Units 28 50 36 26 Unit Cost $17 22 Total Cost $ 476 1,100 Required: 1. Compute the inventory turnover ratio for the month of January under the FIFO and LIFO inventory costing methods. 2. Which costing method is the more accurate indicator of the efficiency of inventory management? FIFO Inventory turnover ratio LIFO Inventory turnover ratio Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the inventory turnover ratio for the month of January under the FIFO and LIFO inventory costing methods. (Do not round intermediate calculations and round your final answers to 2 decimal places.)
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