John Adams Company's record of transactions for the month of April was as follows. Purchases Sales April 1 (balance on hand) 600 @ $ 6.00 April 3 500 @ $10.00 4 1,500 @ 6.08 9 1,400 @ 10.00 8 800 @ 6.40 11 600 @ 11.00 13 1,200 @ 6.50 23 1,200 @ 11.00 21 700 @ 6.60 27 900 @ 12.00 29 500 @ 6.79 4,600 5,300 Instructions a. Assuming that periodic inventory records are kept in units only, compute the inventory at April 30 using (1) LIFO and (2) average-cost. b. Assuming that perpetual inventory records are kept in dollars, determine the inventory using (1) FIFO and (2) LIFO. c. Compute cost of goods sold assuming periodic inventory procedures and inventory priced at FIFO. d. In an inflationary period, which inventory method—FIFO, LIFO, average-cost—will show the highest net income?
John Adams Company's record of transactions for the month of April was as follows. Purchases Sales April 1 (balance on hand) 600 @ $ 6.00 April 3 500 @ $10.00 4 1,500 @ 6.08 9 1,400 @ 10.00 8 800 @ 6.40 11 600 @ 11.00 13 1,200 @ 6.50 23 1,200 @ 11.00 21 700 @ 6.60 27 900 @ 12.00 29 500 @ 6.79 4,600 5,300 Instructions a. Assuming that periodic inventory records are kept in units only, compute the inventory at April 30 using (1) LIFO and (2) average-cost. b. Assuming that perpetual inventory records are kept in dollars, determine the inventory using (1) FIFO and (2) LIFO. c. Compute cost of goods sold assuming periodic inventory procedures and inventory priced at FIFO. d. In an inflationary period, which inventory method—FIFO, LIFO, average-cost—will show the highest net income?
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter9: Current Liabilities, Contingencies, And The Time Value Of Money
Section: Chapter Questions
Problem 9.4E: Transaction Analysis Pollys Cards $ Gifts Shop had the following transactions during the year:...
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John Adams Company's record of transactions for the month of April was as follows.
| Purchases | Sales | ||||||||
| April 1 | (balance on hand) | 600 | @ | $ 6.00 | April 3 | 500 | @ | $10.00 | |
| 4 | 1,500 | @ | 6.08 | 9 | 1,400 | @ | 10.00 | ||
| 8 | 800 | @ | 6.40 | 11 | 600 | @ | 11.00 | ||
| 13 | 1,200 | @ | 6.50 | 23 | 1,200 | @ | 11.00 | ||
| 21 | 700 | @ | 6.60 | 27 | 900 | @ | 12.00 | ||
| 29 | 500 | @ | 6.79 | 4,600 | |||||
| 5,300 |
Instructions
a. Assuming that periodic inventory records are kept in units only, compute the inventory at April 30 using (1) LIFO and (2) average-cost.
b. Assuming that perpetual inventory records are kept in dollars, determine the inventory using (1) FIFO and (2) LIFO.
c. Compute cost of goods sold assuming periodic inventory procedures and inventory priced at FIFO.
d. In an inflationary period, which inventory method—FIFO, LIFO, average-cost—will show the highest net income?
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