Required a. Prepare the purchase entry assuming a perpetual inventory system. b. Determine the value of ending inventory assuming the following quantities are in inventory at year-end: grade A, 120 bags; grade B, 96 bags; and grade C, 48 bags. c. Prepare the entry for sale of 24 bags of grade A pecans at a market price of $6.75 cash per bag. Note: Carry all decimals in calculations; round the final answer to the nearest dollar.

Required a. Prepare the purchase entry assuming a perpetual inventory system. b. Determine the value of ending inventory assuming the following quantities are in inventory at year-end: grade A, 120 bags; grade B, 96 bags; and grade C, 48 bags. c. Prepare the entry for sale of 24 bags of grade A pecans at a market price of $6.75 cash per bag. Note: Carry all decimals in calculations; round the final answer to the nearest dollar.

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 50E: Inventory Costing Methods Crandall Distributors uses a perpetual inventory system and has the...

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Inventory Costing Methods 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?
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