Soler Company uses the periodic method to account for inventory. At the beginning of the year, Soler had 300 units of inventory that cost $45 (you need to include this inventory in your count when answering the questions below).Soler had the following inventory purchases throughout the period:First250units @$50 =$12,500 Second430units @$52 =$22,360 Third325units @$55 =$17,875 Fourth205units @$57 =$11,685 Throughout the year, Soler sold 1,025 units for $120 per unit.Using the information above, complete the following:How many units are there in Ending Inventory?What is the Cost of Goods Available for Sale?What is the average cost per unit of inventory?Calculate the Cost of Goods Sold and Ending Inventory using FIFO. (You can use the long way or the shortcut method).Calculate the Cost of Goods Sold and Ending Inventory using LIFO. (You can use the long way or the shortcut method).Calculate the Cost of Goods Sold and Ending Inventory using Average Cost. (You can use the long way or the shortcut method).Which method will result in the lowest Income Taxes for the period? (FIFO, LIFO, or Average Cost?)If prices were DECREASING, which method would yield the highest net income?Can Soler switch methods next period to take advantage of the tax benefits, then switch back to its current method in the period after that? What principle, constraint or assumption did you employ in making your decision?Assume that Soler uses the FIFO method to account for inventory and the current Net Realizable Value for the inventory is $25,100. At what amount would Soler report this inventory on its Balance Sheet, assuming that they elect to report at the Lower of Cost or Net Realizable Value? (To solve for this, compare ending inventory under FIFO to the Net Realizable Value).Assume that Soler uses the FIFO method to account for inventory. Using the beginning inventory (45 units X $300 per unit), the FIFO ending inventory and COGS calculated in part 4 of this question, what is Soler’s Inventory Turnover? What is Soler’s Days in Inventory? Be sure to show your calculations.Assume that the industry average for Inventory Turnover is 5.6. Is Soler doing a better or worse job of managing its inventory? What are some of the problems a company can have if they do not properly manage their inventory? What can they do to improve their inventory management?

Name: Soler Company uses the periodic method to account for inventory. At th
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Description: Soler Company uses the periodic method to account for inventory. At the beginning of the year, Soler had 300 units of inventory that cost $45 (you need to include this inventory in your count when answering the questions below).Soler had the followin

Average cost per unit is calculated by dividing the total cost of goods available for sale with the…

Answered: Soler Company uses the periodic method…

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter13: Accounting For Merchandise Inventory

Section: Chapter Questions

Problem 1MP: Hurst Companys beginning inventory and purchases during the fiscal year ended December 31, 20-2,...

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Soler Company uses the periodic method to account for inventory. At the beginning of the year, Soler had 300 units of inventory that cost $45 (you need to include this inventory in your count when answering the questions below).

Soler had the following inventory purchases throughout the period:

First	250	units	@	$50	=	$12,500

Second	430	units	@	$52	=	$22,360

Third	325	units	@	$55	=	$17,875

Fourth	205	units	@	$57	=	$11,685

Throughout the year, Soler sold 1,025 units for $120 per unit.

Using the information above, complete the following:

How many units are there in Ending Inventory?
What is the Cost of Goods Available for Sale?
What is the average cost per unit of inventory?
Calculate the Cost of Goods Sold and Ending Inventory using FIFO. (You can use the long way or the shortcut method).
Calculate the Cost of Goods Sold and Ending Inventory using LIFO. (You can use the long way or the shortcut method).
Calculate the Cost of Goods Sold and Ending Inventory using Average Cost. (You can use the long way or the shortcut method).
Which method will result in the lowest Income Taxes for the period? (FIFO, LIFO, or Average Cost?)
If prices were DECREASING, which method would yield the highest net income?
Can Soler switch methods next period to take advantage of the tax benefits, then switch back to its current method in the period after that? What principle, constraint or assumption did you employ in making your decision?
Assume that Soler uses the FIFO method to account for inventory and the current Net Realizable Value for the inventory is $25,100. At what amount would Soler report this inventory on its Balance Sheet, assuming that they elect to report at the Lower of Cost or Net Realizable Value? (To solve for this, compare ending inventory under FIFO to the Net Realizable Value).
Assume that Soler uses the FIFO method to account for inventory. Using the beginning inventory (45 units X $300 per unit), the FIFO ending inventory and COGS calculated in part 4 of this question, what is Soler’s Inventory Turnover? What is Soler’s Days in Inventory? Be sure to show your calculations.
Assume that the industry average for Inventory Turnover is 5.6. Is Soler doing a better or worse job of managing its inventory? What are some of the problems a company can have if they do not properly manage their inventory? What can they do to improve their inventory management?

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