Concept explainers
1.
Introduction:
Inventory is a record of finished goods of a company which they can sell to the customer, work in progress which can be transformed into finish goods and raw material which is a means of production. Inventory is also classified as a current asset in the balance sheet and it is valued by FIFO LIFO and weighted average method.
To calculate: The total cost of goods available for sale and the number of units available for sales.
1.
Answer to Problem 1PSA
The total cost of goods available for sale is $249300 and the total number of goods available for sale is 680 units
Explanation of Solution
Cost of goods available for sales and the number of goods available for sales:
Date | Particular | Unit | Rate ($) | Total Cost ($) |
1st March | Opening inventory | 100 | 50 | 5,000 |
5th March | Purchases | 400 | 55 | 22,000 |
18th March | Purchases | 120 | 60 | 7,200 |
25st March | Purchases | 200 | 62 | 12,400 |
Total | 822 | 46,600 |
So, the total cost of goods available for sale is $846,600 and the total number of goods available for sale is 822 units
2.
Introduction:
Inventory is a record of finished goods of a company which they can sell to the customer, work in progress which can be transformed into finish goods and raw material which is a means of production. Inventory is also classified as a current asset in the balance sheet and it is valued by FIFO LIFO and weighted average method.
To compute: The number of unit in ending inventory for the company A.
2.
Answer to Problem 1PSA
The number of units in ending inventory is 400 units.
Explanation of Solution
The number of units in closing inventory is as follows:
The number of units in ending inventory is 240 units
3.
Introduction:
Inventory is a record of finished goods of a company which they can sell to the customer, work in progress which can be transformed into finish goods and raw material which is a means of production. Inventory is also classified as a current asset in the balance sheet and it is valued by FIFO LIFO and weighted average method.
To compute: The cost assigned to ending inventory for company A using FIFO, LIFO and weighted average and specific identification.
3.
Answer to Problem 1PSA
Explanation of Solution
a. Cost assigned to ending inventory for the company A using FIFO :
Using FIFO method closing inventory of 240 units will consist:
Thus, the cost assigned to ending inventory is $18,400.
b. Calculating the assigned amount of ending inventory according to the LIFO method:
Using the LIFO method closing inventory of 240 units will consist
Thus, cost of assigned to ending inventory is $14,352
Calculating the assigned amount of ending inventory according to weighted-average method:
The weighted average cost is calculated as:
Particular | Cost of goods available for sale | Cost of goods sold | Ending inventory | ||||||
Unit | Per unit ($) | Total ($) | Units | Per unit | Total | Units | Per unit cost | Ending inventory | |
Beginning inventory | 100 | 50 | 5,000 | 100 | 50 | 5,000 | |||
5th march Purchase | 400 | 55 | 22,000 | 500 | 54 | 27,000 | |||
9th march Sale | 420 | 54 | 22,680 | 80 | 54 | 43,20 | |||
18th march Purchase | 120 | 60 | 7,200 | 200 | 58 | 11,520 | |||
25th march Purchase | 200 | 62 | 12,400 | 400 | 59.8 | 23,920 | |||
29th march Sale | 160 | 62 | 9,920 | 240 | 59.8 | 14,352 | |||
$14,352 |
Thus, cost assigned to ending inventory $ 14352
Cost assigned to total inventory using specific identification method:
Using specific identification method closing inventory of 240 units will consist
Thus, cost assigned to ending inventory is $144060.
4.
Introduction:
Inventory is a record of finished goods of a company which they can sell to the customer, work in progress which can be transformed into finish goods and raw material which is a means of production. Inventory is also classified as a current asset in the balance sheet and it is valued by FIFO LIFO and weighted average method.
To compute: The gross profit earn by the company is cost assigned to ending inventory for the company A using FIFO,LIFO and weighted average and specific identification.
4.
Answer to Problem 1PSA
Gross using FIFO methods is $46200 , using LIFO method is $45800, using weighted average method is $44956, and specific identification method is $46000.
Explanation of Solution
Particular | FIFO | LIFO | Specific identification. | weighted average |
Cost of goods available for sale | 46,600 | 46,600 | 46,600 | 46,600 |
Less: closing stock 240 units | 14,800 | 13,680 | 14,060 | 14,352 |
Cost of goods sold | 31,800 | 32,920 | 32,540 | 32,248 |
Gross profit earned by the company:
Particular | FIFO method | LIFO method | Weighted average method | Specific identification method |
Total Sales | $50,900 | $50,900 | $50,900 | $50,900 |
Less: Cost of goods sold | $31,800 | 32,920 | 32,540 | 32,248 |
Total | 19100 | 17980 | 18360 | 18652 |
Thus, gross using FIFO methods is $19,100, using the LIFO method is $17,980, using the weighted average method is $18,360, and the specific identification method is $18,652.
Want to see more full solutions like this?
Chapter 5 Solutions
Financial Accounting: Information for Decisions
- Dymac Appliances uses the periodic inventory system. Details regarding the inventory of appliances at January 1, purchases invoices during the next 12 months, 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.arrow_forwardCarla Company uses the perpetual inventory system. The following information is available for January of the current year when Carla sold 1,600 units of inventory on January 14. Using the FIFO method, calculate Carlas cost of goods sold for January and its January 31 inventory.arrow_forwardThe beginning inventory for Dunne Co. and data on purchases and sales for a three-month period are shown in Problem 7-1B. Instructions 1. Determine the inventory on June 30 and the cost of merchandise sold for the three-month period, using the first-in, first-out method and the periodic inventory system. 2. Determine the inventory on June 30 and the cost of merchandise sold for the three-month period, using the last-in, first-out method and the periodic inventory system. 3. Determine the inventory on June 30 and the cost of merchandise sold for the three-month period, using the weighted average cost method and the periodic inventory system. Round the weighted average unit cost to the dollar. 4. Compare the gross profit and June 30 inventories using the following column headings:arrow_forward
- Jessie Stores uses the periodic system of calculating inventory. The following information is available for December of the current year when Jessie sold 500 units of inventory. Using the FIFO method, calculate Jessies inventory on December 31 and its cost of goods sold for December.arrow_forwardJessie Stores uses the periodic system of calculating inventory. The following information is available for December of the current year when Jessie sold 500 units of inventory. Using the FIFO method, calculate Jessies inventory on December 31 and its cost of goods sold for December. RE7-11 Using the information from RE7-10, calculate Jessie Storess inventory on December 31 and its cost of goods sold for December using the LIFO method.arrow_forwardData on the physical inventory of Ashwood Products Company as of December 31 follow: Quantity and cost data from the last purchases invoice of the year and the next-to-the-last purchases invoice are summarized as follows: Instructions Determine the inventory at cost as well as at the lower of cost or market, using the first-in, first-out method. Record the appropriate unit costs on the inventory sheet and complete the pricing of the inventory. When there are two different unit costs applicable to an item, proceed as follows: 1. Draw a line through the quantity and insert the quantity and unit cost of the last purchase. 2. On the following line, insert the quantity and unit cost of the next-to-the-last purchase. 3. Total the cost and market columns and insert the lower of the two totals in the Lower of C or M column. The first item on the inventory sheet has been completed as an example.arrow_forward
- 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.arrow_forwardGolden Eagle Company began operations on April 1 by selling a single product. Data on purchases and sales for the year are as follows: Purchases: Sales: 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_forwardThe beginning inventory for Funky Party Supplies and data on purchases and sales for a three-month period are shown in Problem 7-1A. Instructions 1. Determine the inventory on March 31, 2016, and the cost of goods sold for the three-month period, using the first-in, first-out method and the periodic inventory system. 2. Determine the inventory on March 31, 2016, and the cost of goods sold for the three-month period, using the last-in, first-out method and the periodic inventory system. 3. Determine the inventory on March 31, 2016, and the cost of goods sold for the three-month period, using the weighted average cost method and the periodic inventory system. Round the weighted average unit cost to the nearest cent. 4. Compare the gross profit and the March 31, 2016, inventories, using the following column headings:arrow_forward
- Reid Company uses the periodic inventory system. On January 1, it had an inventory balance of 250,000. During the year, it made 613,000 of net purchases. At the end of the year, a physical inventory showed it had ending inventory of 140,000. Calculate Reid Companys cost of goods sold for the year.arrow_forwardFIFO perpetual inventory The beginning inventory at Dunne Co. and data on purchases and sales for a three-month period ending June 30 are as follows: Instructions 1. Record the inventory, purchases, and cost of goods sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3, using the first-in, first-out method. 2. Determine the total sales and the total cost of goods sold for the period. Journalize the entries in the sales and cost of goods sold accounts. Assume that all sales were on account. 3. Determine the gross profit from sales for the period. 4. Determine the ending inventory cost on June 30. 5. Based upon the preceding data, would you expect the ending inventory using the last-in, first-out method to be higher or lower?arrow_forward
- College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
- Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning