E8.22 (FIFO and LIFO Effects) You are the vice president of finance of Mickiewicz Corporation, a retail company that prepared two different schedules of gross margin for the first quarter ended March 31, 2019. These schedules appear below. (on picture) The computation of cost of goods sold in each schedule is based on the following data. (on picture) Peggy Fleming, the president of the company, cannot understand how two different gross margins can be computed from the same set of data. As the vice president of finance, you have explained to Ms. Fleming that the two schedules are based on different assumptions concerning the flow of inventory costs, i.e., FIFO and LIFO. Schedules 1 and 2 were not necessarily prepared in this sequence of cost flow assumptions. Instructions : Prepare two separate schedules computing cost of goods sold and supporting schedules showing the composition of the ending inventory under both cost flow assumptions (assume periodic system).
E8.22 (FIFO and LIFO Effects) You are the vice president of finance of Mickiewicz Corporation, a retail company that prepared two different schedules of gross margin for the first quarter ended March 31, 2019. These schedules appear below. (on picture) The computation of cost of goods sold in each schedule is based on the following data. (on picture) Peggy Fleming, the president of the company, cannot understand how two different gross margins can be computed from the same set of data. As the vice president of finance, you have explained to Ms. Fleming that the two schedules are based on different assumptions concerning the flow of inventory costs, i.e., FIFO and LIFO. Schedules 1 and 2 were not necessarily prepared in this sequence of cost flow assumptions. Instructions : Prepare two separate schedules computing cost of goods sold and supporting schedules showing the composition of the ending inventory under both cost flow assumptions (assume periodic system).
Chapter9: Accounting For Receivables
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E8.22 (FIFO and LIFO Effects)
You are the vice president of finance of Mickiewicz Corporation, a retail company that prepared two different schedules of gross margin for the first quarter ended March 31, 2019. These schedules appear below. (on picture)
The computation of cost of goods sold in each schedule is based on the following data. (on picture)
Peggy Fleming, the president of the company, cannot understand how two different gross margins can be computed from the same set of data. As the vice president of finance, you have explained to Ms. Fleming that the two schedules are based on different assumptions concerning the flow of inventory costs, i.e., FIFO and LIFO. Schedules 1 and 2 were not necessarily prepared in this sequence of cost flow assumptions.
Instructions : Prepare two separate schedules computing cost of goods sold and supporting schedules showing the composition of the ending inventory under both cost flow assumptions (assume periodic system).
Transcribed Image Text:*E8.22 (LO3, 5) (FIFO and LIFO Effects) You are the vice president of finance of
Mickiewicz Corporation, a retail company that prepared two different schedules
of gross margin for the first quarter ended March 31, 2019. These schedules
appear below.
Sales ($5 per unit) Cost of Goods Sold Gross Margin
Schedule 1
$150,000
$124,900
$25, 100
Schedule 2
150,000
129,600
20,400
The computation of cost of goods sold in each schedule is based on the following
data.
Units Cost per Unit Total Cost
Beginning inventory, January 1 10,000
$4.00
$40,000
Purchase, January 10
8,000
4.20
33,600
Purchase, January 30
6,000
4.25
25,500
Purchase, February 11
9,000
4.30
38,700
Purchase, March 17
12,000
4.40
52,800
Peggy Fleming, the president of the company, cannot understand how two
different gross margins can be computed from the same set of data. As the vice
president of finance, you have explained to Ms. Fleming that the two schedules
are based on different assumptions concerning the flow of inventory costs, i.e.,
FIFO and LIFO. Schedules 1 and 2 were not necessarily prepared in this
sequence of cost flow assumptions.
Instructions
Prepare two separate schedules computing cost of goods sold and supporting
schedules showing the composition of the ending inventory under both cost flow
assumptions (assume periodic system).
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