Presented below is information related to Blowfish radios for the Hootie Company for the month of July. Date Transaction Units In Unit Cost Total Units Sold Selling Price Total July 1 Balance 100 $4.10 $ 410 6 Purchase 800 4.20 3,360 7 Sale 300 $7.00 $ 2,100 10 Sale 300 7.30 2,190 12 Purchase 400 4.50 1,800 15 Sale 200 7.40 1,480 18 Purchase 300 4.60 1,380 22 Sale 400 7.40 2,960 25 Purchase 500 4.58 2,290 30 Sale 200 7.50 1,500 Totals 2,100 $9,240 1,400 $10,230 Instructions a. Assuming that the periodic inventory method is used, compute the inventory cost at July 31 under each of the following cost flow assumptions. 1. FIFO. 2. LIFO. 3. Weighted-average. b. Answer the following questions. 1. Which of the methods used above will yield the lowest figure for gross profit for the income statement? Explain why. 2. Which of the methods used above will yield the lowest figure for ending inventory for the balance sheet? Explain why.
Presented below is information related to Blowfish radios for the Hootie Company for the month of July. Date Transaction Units In Unit Cost Total Units Sold Selling Price Total July 1 Balance 100 $4.10 $ 410 6 Purchase 800 4.20 3,360 7 Sale 300 $7.00 $ 2,100 10 Sale 300 7.30 2,190 12 Purchase 400 4.50 1,800 15 Sale 200 7.40 1,480 18 Purchase 300 4.60 1,380 22 Sale 400 7.40 2,960 25 Purchase 500 4.58 2,290 30 Sale 200 7.50 1,500 Totals 2,100 $9,240 1,400 $10,230 Instructions a. Assuming that the periodic inventory method is used, compute the inventory cost at July 31 under each of the following cost flow assumptions. 1. FIFO. 2. LIFO. 3. Weighted-average. b. Answer the following questions. 1. Which of the methods used above will yield the lowest figure for gross profit for the income statement? Explain why. 2. Which of the methods used above will yield the lowest figure for ending inventory for the balance sheet? Explain why.
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
Chapter5: Inventories And Cost Of Goods Sold
Section: Chapter Questions
Problem 5.10MCP: Comparison of Inventory Costing Methods—Periodic System Bitten Companys inventory records show 600...
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Question
Presented below is information related to Blowfish radios for the Hootie Company for the month of July.
| Date | Transaction | Units In |
Unit Cost |
Total | Units Sold |
Selling Price |
Total | |||||||
| July 1 | Balance | 100 | $4.10 | $ 410 | ||||||||||
| 6 | Purchase | 800 | 4.20 | 3,360 | ||||||||||
| 7 | Sale | 300 | $7.00 | $ 2,100 | ||||||||||
| 10 | Sale | 300 | 7.30 | 2,190 | ||||||||||
| 12 | Purchase | 400 | 4.50 | 1,800 | ||||||||||
| 15 | Sale | 200 | 7.40 | 1,480 | ||||||||||
| 18 | Purchase | 300 | 4.60 | 1,380 | ||||||||||
| 22 | Sale | 400 | 7.40 | 2,960 | ||||||||||
| 25 | Purchase | 500 | 4.58 | 2,290 | ||||||||||
| 30 | Sale | 200 | 7.50 | 1,500 | ||||||||||
| Totals | 2,100 | $9,240 | 1,400 | $10,230 |
Instructions
a. Assuming that the periodic inventory method is used, compute the inventory cost at July 31 under each of the following cost flow assumptions.
1. FIFO.
2. LIFO.
3. Weighted-average.
b. Answer the following questions.
1. Which of the methods used above will yield the lowest figure for gross profit for the income statement? Explain why.
2. Which of the methods used above will yield the lowest figure for ending inventory for the balance sheet? Explain why.
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