Answered: Purchase Price Sale Price Activity…

Corporate Financial Accounting

14th Edition

ISBN:9781305653535

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter6: Inventories

Section: Chapter Questions

Problem 6.2BE: Perpetual inventory using FIFO Beginning inventory, purchases, and sales for Item Zeta9 are as...

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Crandall Distributors uses a perpetual inventory system and has the following data available for inventory, purchases, and sales for a recent year: Required:
1. Compute the cost of ending inventory and the cost of goods sold using the specific identification method. Assume the ending inventory is made up of 40 units from beginning inventory, 30 units from Purchase 1, 80 units from Purchase 2, and 40 units from Purchase 3.
2. Compute the cost of ending inventory and cost of goods sold using the FIFO inventory costing method.
3. Compute the cost of ending inventory and cost of goods sold using the LIFO inventory costing method.
4. Compute the cost of ending inventory and cost of goods sold using the average cost inventory costing method. (Note: Use four decimal places for per-unit calculations and round all
other numbers to the nearest dollar.) 5. CONCEPTUAL CONNECTION Compare the ending inventory and cost of goods sold computed under all four methods. What can you conclude about the effects of the inventory
costing methods on the balance sheet and the income statement?

Purchase Price
Sale Price
Activity
Units
(per unit)
(per unit)
Beginning inventory
Purchase 1, Jan. 18
Sale 1
Sale 2
Purchase 2, Mar. 10
Sale 3
Sale 4
Purchase 3, Sept. 30
Sale 5
110
$7.10
575
7.20
380
$12.00
225
12.00
680
7.50
270
12.00
290
12.50
230
7.70
240
12.50

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