Simple Plan Enterprises uses a perlodic Inventory system. Its records showed the following: Inventory, December 31, using FIFO - 44 Units @ $17 = $748 Inventory, December 31, using LIFO – 44 Units @ $13 = $572 Transactions in the Following Year Purchase, January 9 Purchase, January 20 Sale, January 11 (at $41 per unit) Sale, January 27 (at $42 per unit) Units Unit Cost Total Cost 56 18 $ 1,888 106 19 2,814 86 62 Required: 1. Compute the number and cost of goods avallable for sale, the cost of ending Inventory, and the cost of goods sold under FIFO and LIFO. 2 Compute the Inventory turnover ratio under the FIFO and LIFO Inventory costing methods. 3. Does the Inventory method used make a significant difference In the Inventory turnover ratio?

Simple Plan Enterprises uses a perlodic Inventory system. Its records showed the following: Inventory, December 31, using FIFO - 44 Units @ $17 = $748 Inventory, December 31, using LIFO – 44 Units @ $13 = $572 Transactions in the Following Year Purchase, January 9 Purchase, January 20 Sale, January 11 (at $41 per unit) Sale, January 27 (at $42 per unit) Units Unit Cost Total Cost 56 18 $ 1,888 106 19 2,814 86 62 Required: 1. Compute the number and cost of goods avallable for sale, the cost of ending Inventory, and the cost of goods sold under FIFO and LIFO. 2 Compute the Inventory turnover ratio under the FIFO and LIFO Inventory costing methods. 3. Does the Inventory method used make a significant difference In the Inventory turnover ratio?

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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Hurst Companys beginning inventory and purchases during the fiscal year ended December 31, 20-2, were as follows: There are 1,200 units of inventory on hand on December 31, 20-2. REQUIRED 1. Calculate the total amount to be assigned to the cost of goods sold for 20-2 and ending inventory on December 31 under each of the following periodic inventory methods: (a) FIFO (b) LIFO (c) Weighted-average (round calculations to two decimal places) 2. Assume that the market price per unit (cost to replace) of Hursts inventory on December 31 was 18. Calculate the total amount to be assigned to the ending inventory on December 31 under each of the following methods: (a) FIFO lower-of-cost-or-market (b) Weighted-average lower-of-cost-or-market 3. In addition to taking a physical inventory on December 31, Hurst decides to estimate the ending inventory and cost of goods sold. During the fiscal year ended December 31, 20-2, net sales of 100,000 were made at a normal gross profit rate of 35%. Use the gross profit method to estimate the cost of goods sold for the fiscal year ended December 31 and the inventory on December 31.
Pappas Appliances uses the periodic inventory system. Details regarding the inventory of appliances at January 1, purchases invoices during the year, and the inventory count at December 31 are summarized as follows: Instructions 1. Determine the cost of the inventory on December 31 by the first-in, first-out method. Present data in columnar form, using the following headings: If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase. 2. Determine the cost of the inventory on December 31 by the last-in, first-out method, following the procedures indicated in (1). 3. Determine the cost of the inventory on December 31 by the weighted average cost method, using the columnar headings indicated in (1). 4. Discuss which method (FIFO or LIFO) would be preferred for income tax purposes in periods of (a) rising prices and (b) declining prices.
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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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The moving average inventory cost flow assumption is applicable to which of the following inventory systems? Questions M7-6 and M7-7 are based on the following data: City Stationers Inc. had 200 calculators on hand on January 1, 2019, costing 18 each. Purchases and sales of calculators during the month of January were as follows: City uses a periodic inventory system. According to a physical count, 150 calculators were on hand at January 31, 2019.