S.Claus Company makes toys and gifts. At the beginning of July, it owned 200 gallons of red paint, which were recorded on the balance sheet at $4.00 per gallon. The following events occurred in the next quarter. 1. Purchased 300 gallons on July 1 at $4.25 each. 2. Purchased 500 gallons on August 1 at $4.50 each. 3. Purchased 800 gallons during September at $4.75 each. 4. Used 1,450 gallons during July through September. Required Calculate the inventory balance at the end of September and the cost of goods sold during these three months, using FIFO & LIFO accounting. Explain and discuss the differences shown under each method. Explain why the total costs of goods available for sale must be identical under all methods.
S.Claus Company makes toys and gifts. At the beginning of July, it owned 200 gallons of red paint, which were recorded on the balance sheet at $4.00 per gallon. The following events occurred in the next quarter. 1. Purchased 300 gallons on July 1 at $4.25 each. 2. Purchased 500 gallons on August 1 at $4.50 each. 3. Purchased 800 gallons during September at $4.75 each. 4. Used 1,450 gallons during July through September. Required Calculate the inventory balance at the end of September and the cost of goods sold during these three months, using FIFO & LIFO accounting. Explain and discuss the differences shown under each method. Explain why the total costs of goods available for sale must be identical under all methods.
Excel Applications for Accounting Principles
4th Edition
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Gaylord N. Smith
Chapter7: Inventory Cost Flow Assumptions (fifolifo)
Section: Chapter Questions
Problem 2R: Del Rio began Rio Enterprises on January 1 with 200 units of inventory. During the year, 500...
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S.Claus Company makes toys and gifts. At the beginning of July, it owned 200 gallons of red
paint, which were recorded on the balance sheet at $4.00 per gallon.
The following events occurred in the next quarter.
1. Purchased 300 gallons on July 1 at $4.25 each.
2. Purchased 500 gallons on August 1 at $4.50 each.
3. Purchased 800 gallons during September at $4.75 each.
4. Used 1,450 gallons during July through September.
Required
Calculate the inventory balance at the end of September and the cost of goods sold during
these three months, using FIFO & LIFO accounting.
Explain and discuss the differences shown under each method.
Explain why the total costs of goods available for sale must be identical under all methods.
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