Problem 14-10 (IAA)Glamor Company provided the following data:Beginning inventoryCostSelling pricePurchases:Cost500,000770,000Selling priceTransportation inPurchase discountPurchase return:Cost3,070,0004,300,00070,00045,000Selling priceSales returnSales discount.MarkupMarkdownCancelation of markupCancelation of markdownSales25,00040,00080,00020,000100,000350,00030,00010,0004,000,000ng1. What amount should be reported as cost of endinginventory using the lower of average cost and netrealizable value approach?a. 596,400.b. 588,000c. 582,200d. 574,000ingWhat amount should be reported as cost of endinginventory using the average cost approach?a. 615,000b. 570,000c. 630,000d. 539,600

Computation of the cost of ending inventory and average cost are as follows:

Problem 14-10 (IAA) Glamor Company provided the following data: Beginning inventory Cost Selling price Purchases: Cost Selling price Transportation in Purchase discount Purchase return: Cost Selling price Sales return Sales discount Markup Markdown 500,000 770,000 3,070,000 4,300,000 70,000 45,000 25,000 40,000 80,000 20,000 100,000 350,000

Problem 14-10 (IAA) Glamor Company provided the following data: Beginning inventory Cost Selling price Purchases: Cost Selling price Transportation in Purchase discount Purchase return: Cost Selling price Sales return Sales discount Markup Markdown 500,000 770,000 3,070,000 4,300,000 70,000 45,000 25,000 40,000 80,000 20,000 100,000 350,000

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter6: Cost Of Goods Sold And Inventory

Section: Chapter Questions

Problem 32CE: ( Appendix 6B) Inventory Costing Methods: Periodic Average Cost Refer to the information for...

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Lower of cost or market Using data in E6-18, indicate the effects of valuing inventory using lower of Cost or market on the liquidity metric days’ sales in inventory and profitability metric return on sales.
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Calculate the cost of goods sold dollar value for B74 Company for the sale on November 20, considering the following transactions under three different cost allocation methods and using perpetual inventory updating. Provide calculations for (a) first-in, first-out (FIFO); (b) last-in, first-out (LIFO); and (c) weighted average (AVG).
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Inventory Write-Down Stiles Corporation uses the FIFO cost flow assumption and is in the process of applying the LCNRV rule for each of two products in its ending inventory. A profit margin of 30% on the selling price is considered normal for each product. Specific data for each product are as follows: Inventory Write-Down Use the information in E8-1. Assume that Stiles uses the LIFO cost flow assumption and is applying the LCM rule. Required: 1. What is the correct inventory value for each product? 2. Next Level With regard to requirement 1, what effect does the imposition of the constraints on market value have on the inventory valuations?
Using the following data, how should the inventory be valued under lower of cost or market? Original cost 1,350 Estimated selling price 1,475 Selling expenses 180
Inventory Valuation Specific identification method Weighted average cost method FIFO method LIFO method LIFO liquidation LIFO conformity rule LIFO reserve Replacement cost Inventory profit Lower-of-cost-or-market (LCM) rule Inventory turnover ratio Number of days sales in inventory Moving average (Appendix) The name given to an average cost method when a weighted average cost assumption is used with a perpetual inventory system. An inventory costing method that assigns the same unit cost to all units available for sale during the period. A conservative inventory valuation approach that is an attempt to anticipate declines in the value of inventory before its actual sale. An inventory costing method that assigns the most recent costs to ending inventory. The current cost of a unit of inventory. An inventory costing method that assigns the most recent costs to cost of goods sold. A measure of how long it takes to sell inventory. The IRS requirement that when LIFO is used on a tax return, it must also be used in reporting income to stockholders. An inventory costing method that relies on matching unit costs with the actual units sold. The portion of the gross profit that results from holding inventory during a period of rising prices. The result of selling more units than are purchased during the period, which can have negative tax consequences if a company is using LIFO. The excess of the value of a companys inventory stated at FIFO over the value stated at LIFO. A measure of the number of times inventory is sold during the period.
( Appendix 6B) Inventory Costing Methods: Periodic System Harrington Company had the following data for inventory during a recent year: Assume that Harrington uses a periodic inventory accounting system. Required: 1. Using the FIFO, LIFO, and average cost methods, compute the ending inventory and cost of goods sold. ( Note: Use four decimal places for per-unit calculations and round all other numbers to the nearest dollar.) 2. CONCEPTUAL CONNECTION Which method will produce the most realistic amount for income? For inventory? 3. CONCEPTUAL CONNECTION Which method will produce the lowest amount paid for taxes?
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