SURVEY OF ACCOUNTING 360DAY CONNECT CAR
5th Edition
ISBN: 9781260591811
Author: Edmonds
Publisher: MCG
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Chapter 5, Problem 18E
a.
To determine
Ascertain the amount of product costs that would be allocated to cost of goods sold and ending inventory under FIFO method.
b.
To determine
Ascertain the amount of product costs that would be allocated to cost of goods sold and ending inventory under LIFO method.
c.
To determine
Ascertain the amount of product costs that would be allocated to cost of goods sold and ending inventory under weighted average method.
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Problem 5-20A (Algo) Allocating product costs between cost of goods sold and ending inventory: intermittent purchases and sales of merchandise LO 5-1 Skip to question [The following information applies to the questions displayed below.] Pam’s Creations had the following sales and purchase transactions during Year 2. Beginning inventory consisted of 230 items at $99 each. The company uses the FIFO cost flow assumption and keeps perpetual inventory records.
Date Transaction Description March 5 Purchased 290 items @ $109
April 10 Sold 165 items @ $213
June 19 Sold 305 items @ $213
September 16 Purchased 240 items @ $114
November 28 Sold 155 items @ $218 Problem 5-20A (Algo)
Part b b. Calculate the gross margin Pam’s Creations would report on the Year 2 income statement.
Sales
Cost of goods sold
Gross margin
c. Determine the ending inventory balance Pam’s Creations would report on the December 31, Year 2, balance sheet.
Ending inventory
Problem 5-7A (Algo) Periodic: Alternative cost flows LO P1
Seminole Company began the year with 21,500 units of product in its January 1 inventory costing $15.30 each. It made four purchases of its product during the year as follows. The company uses a periodic inventory system. On December 31, a physical count reveals that 38,000 units of its product remain in inventory.
March 7
31,000 units @ $18.30 each
May 25
33,000 units @ $22.30 each
August 1
23,000 units @ $24.30 each
November 10
34,500 units @ $27.30 each
Required:
Compute the number and total cost of the units available for sale during the year.
Compute the amounts assigned to ending inventory and the cost of goods sold using (a) FIFO, (b) LIFO, and (c) weighted average.
Cornerstone Exercise 6-25 Effects of Inventory Costing Methods Filimonov Inc. has the following information related to purchases and sales of one of its inventory items: Date Description Units Purchased at Cost Units Sold at Retail June 1 Beginning Inventory 200 units @ $10 = $2,000 300 units @ $12 = $3,600 9 Purchase 1 400 units @ $25 14 Sale 1 22 Purchase 2 250 units @ $14 = $3,500 29 Sale 2 225 units @ $25 Required: 1. In a period of rising prices, which inventory costing method produces the highest amount for ending inventory? 2. In a period of rising prices, which inventory costing method produces the highest net income? 3. In a period of rising prices, which inventory costing method produces the lowest payment for income taxes? 4. In a period of rising prices, which inventory method generally produces the most realistic amount for cost of goods sold? In a period of rising prices, which inventory method generally produces the most realistic amount for inventory? Would your answer…
Chapter 5 Solutions
SURVEY OF ACCOUNTING 360DAY CONNECT CAR
Ch. 5 - 1. What is the difference between accounts...Ch. 5 - Prob. 2QCh. 5 - 3. What type of account is the Allowance for...Ch. 5 - 4. What are two ways in which estimating...Ch. 5 - 5. When using the allowance method, why is...Ch. 5 - 6. What is the most common format for reporting...Ch. 5 - 7. Why is it necessary to mate an entry to...Ch. 5 - 8. What are some factors considered in estimating...Ch. 5 - Prob. 9QCh. 5 - Prob. 10Q
Ch. 5 - Prob. 11QCh. 5 - Prob. 12QCh. 5 - Prob. 13QCh. 5 - 14. What is an advantage of using the percent of...Ch. 5 - 15. What is aging of accounts receivable?Ch. 5 - Prob. 16QCh. 5 - Prob. 17QCh. 5 - Prob. 18QCh. 5 - 21. What is accrued interest?Ch. 5 - How does the accrual of interest revenue or...Ch. 5 - Prob. 21QCh. 5 - Prob. 22QCh. 5 - Prob. 23QCh. 5 - Prob. 24QCh. 5 - Prob. 25QCh. 5 - 26. What types of costs do businesses avoid when...Ch. 5 - 1. Name and describe the four cost flow methods...Ch. 5 - 2. What are some advantages and disadvantages of...Ch. 5 - Prob. 29QCh. 5 - Prob. 30QCh. 5 - 5. In an inflationary period, which inventory cost...Ch. 5 - 6. In an inflationary period, which inventory cost...Ch. 5 - 7. What is the difference between the flow of...Ch. 5 - Prob. 34QCh. 5 - Prob. 35QCh. 5 - Prob. 36QCh. 5 - Prob. 37QCh. 5 - Prob. 38QCh. 5 - Prob. 39QCh. 5 - Prob. 1ECh. 5 - Exercise 7-1A Analysis of financial statement...Ch. 5 - Prob. 3ECh. 5 - Effect of recognizing uncollectible accounts...Ch. 5 - Analyzing financial statement effects of...Ch. 5 - Effect of recovering a receivable previously...Ch. 5 - Prob. 7ECh. 5 - Prob. 8ECh. 5 - Prob. 9ECh. 5 - Roth Service Co. experienced the following...Ch. 5 - Prob. 11ECh. 5 - On May 1, 2018, Benzs Sandwich Shop loaned 10,000...Ch. 5 - Prob. 13ECh. 5 - Prob. 14ECh. 5 - Luna Company accepted credit cards in payment for...Ch. 5 - Prob. 16ECh. 5 - Prob. 17ECh. 5 - Prob. 18ECh. 5 - Prob. 19ECh. 5 - The Shirt Shop had the following transactions for...Ch. 5 - Prob. 21ECh. 5 - Accounting for uncollectible accountstwo cycles...Ch. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Sage Inc. experienced the following transactions...Ch. 5 - The following transactions apply to Hooper Co. for...Ch. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - The following trial balance was prepared for Tile,...Ch. 5 - Prob. 32PCh. 5 - Prob. 33PCh. 5 - Prob. 1ATCCh. 5 - Prob. 3ATCCh. 5 - Prob. 4ATCCh. 5 - Alonzo Saunders owns a small training services...
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- Communication Golden Eagle Company began operations on April 1 by selling a single product. Data on purchases and sales for the year are as follows: Purchases: Date Units Purchased Unit Cost Total Cost April 6 31,000 36.60 1,134,600 May 18 33,000 39.00 1,287,000 June 6 40,000 39.60 1,584,000 July 10 40,000 42.00 1,680,000 August 10 27,200 42.75 1,162,800 October 25 12,800 43.50 556,800 November 4 8,000 44.85 358,800 December 10 8,000 48.00 384,000 200,000 8,148,000 Sales: April 16,000 units May 16,000 June 20,000 July 24,000 August 28,000 September 28,000 October 18,000 November 10,000 December 8,000 Total Units 168,000 Total sales 10,000,000 The president of the company, Connie Kilmer, has asked for your advice on which inventory cost flow method should be used for the 32,000-unit physical inventory that was taken on December 31. The company plans to expand its product line in the future and uses the periodic inventory system. Write a brief memo to Ms. Kilmer comparing and contrasting the LIFO and FIFO inventory cost flow methods and their potential impacts on the companys financial statements.arrow_forwardFIFO and UFO costs under perpetual inventory system The following units of an item were available for sale during the year: Beginning inventory 7,200 units at 160 Sale 4,800 units at 300 First purchase 16,000 units at 168 Sale 12,000 units at 300 Second purchase 15,000 units at176 Sale 11,000 units at 300 The firm uses the perpetual inventory system, and there are 10,400 units of the item on hand at the end of the year. What is the total cost of the ending inventory according to (A) FIFO and (B) UFO?arrow_forwardCosting inventory Golden Eagle Company begun operations in 2016 by selling a single product. Data on purchases and sales for the year were as follows: Sales: April 16,000 units May 16,000 June 20,000 July 24,000 August 28,000 September 28.000 October 18,000 November 10,000 December 8,000 Total units 168,000 Total sales 10,000,000 On January 4, 2017, the president of the company, Connie Kilmer, asked for your advice on costing the 32,000-unit physical inventory that was taken on December 51, 2016. Moreover, since the firm plans to expand its product line, she asked for your advice on the use of a perpetual inventory system in the future. 1. Determine the cost of the December 31. 2016, inventory under the periodic system, using the (a) first-m, first-out method, (b) last-in, first-out method, and (c) weighted average cost method. 2. Determine the gross profit for the year under each of the three methods in (1). 3. a. Explain varying viewpoints why each of the three inventory costing methods may best reflect the results of operations for 2016. b. Which of the three inventory costing methods may best reflect the replacement cost of the inventory on the balance sheet as of December 31, 2016:' c. Which inventory costing method would you choose to use for income tax purposes? Why? d. Discuss the advantages and disadvantages of using a perpetual inventory system. From the data presented in this case, is there any indication of the adequacy of inventory' levels during the year?arrow_forward
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