GEN. COMBINED FIN.+MAN.ACCT LCPO
9th Edition
ISBN: 9781266151231
Author: Wild
Publisher: MCG
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Textbook Question
Chapter 5, Problem 8PSB
Problem 5-8BA Periodic: Income comparisons and cost flows A1 P3
Shepard Company sold 4,000 units of its product at $100 per unit in year 2017 and incurred operating expenses of $15 per units in selling the units. Inventory and made successive purchases of its products as follows.
Jan, 1 | Beginning inventory ……. | 840 units | @ $ 58 per unit |
Apr, 2 | Purchase ………………… | 600 units | @ $ 59 per unit |
Juno 14 | Purchase ………………... | 1,205 units | @ $ 61 per unit |
Aug. 29 | Purchase ………………… | 700 units | @ $ 64 per unit |
Nov. 18 | Purchase ………………… | 1,655 units | @ $ 65 per unit |
Total …………………….. | 5,000 units |
Required
- Prepare comparative income statements similar to Exhibit 5.8 for the three inventory costing methods of FIOF, LIFO, and weighted average. (Round all amounts to cents.) Include a detailed cost of goods sold section as part of each statement. The company uses a periodic inventory system, and its income tax rate is 40%.
- How would the financial results from using, the three alternative inventory costing, and methods change if the company had been experiencing decreasing prices in its purchases of inventory?
- What advantages and disadvantages are offered by using (a) LIFO and (b) FIFO? Assume the continuing trend of increasing costs.
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Cost Flow Methods
The following three identical units of Item LO3V are purchased during April:
Item Beta
Purchase
1
Purchase
1
[[
Purchase
1
3
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April 15
April 20
Total
a. First-in, first-out (FIFO)
b. Last-in, first-out (LIFO)
c. Weighted average cost
$
Units Cost
$
Average cost per unit
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Assume that one unit is sold on April 27 for $301. Determine the gross profit for April and ending inventory on April 30 using the (a) first-in, first-out (FIFO); (b) last-in, first-out (LIFO); and (c) weighted average cost method.
Gross Profit
82 ✔
$219
X
221
223
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Ending Inventory
$
X
Cost Flow Methods
The following three identical units of Item LO3V are purchased during April:
April 2
April 15
April 20
Total
Average cost per unit
Item Beta
Units
Cost
Purchase
1
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1
294
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297
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(b) last-in, first-out (LIFO); and (c) weighted average cost method,
a. First-in, first-out (FIFO)
b. Last-in, first-out (LIFO)
c. Weighted average cost
Gross Profit
Ending Inventory
$
Cost Flow Methods
The following three identical units of Item K113 are purchased during April:
Cost
April 2
April 15
April 20
Total
Item Beta
a. First-in, first-out (FIFO)
b. Last-in, first-out (LIFO)
c. Weighted average cost
Purchase
Purchase
Purchase
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1
1
1
3
$
$504
Average cost per unit
$168 ($504 + 3 units)
Assume that one unit is sold on April 27 for $210. Determine the gross profit for April and ending inventory on April 30 using the (a) first-in, first-out (FIFO); (b) last-in,
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Gross Profit
$165
168
171
Ending Inventory
$
Chapter 5 Solutions
GEN. COMBINED FIN.+MAN.ACCT LCPO
Ch. 5 - Prob. 1QSCh. 5 - Prob. 2QSCh. 5 - Prob. 3QSCh. 5 - Prob. 4QSCh. 5 - Perpetual: Inventory costing with FIFO P1 A...Ch. 5 - Prob. 6QSCh. 5 - Prob. 7QSCh. 5 - Prob. 8QSCh. 5 - Prob. 9QSCh. 5 - A Periodic: Inventory costing with weighted...
Ch. 5 - Prob. 11QSCh. 5 - Prob. 12QSCh. 5 - Perpetual: Inventory costing with weighted average...Ch. 5 - Prob. 14QSCh. 5 - Prob. 15QSCh. 5 - Prob. 16QSCh. 5 - Prob. 17QSCh. 5 - Prob. 18QSCh. 5 - Prob. 19QSCh. 5 - Prob. 20QSCh. 5 - Prob. 21QSCh. 5 - Prob. 22QSCh. 5 - Prob. 23QSCh. 5 - Prob. 24QSCh. 5 - Prob. 25QSCh. 5 - Prob. 26QSCh. 5 - Prob. 1ECh. 5 - Prob. 2ECh. 5 - Exercise 5-3 Perpetual: Inventory costing methods...Ch. 5 - Prob. 4ECh. 5 - Prob. 5ECh. 5 - Prob. 6ECh. 5 - Prob. 7ECh. 5 - Prob. 8ECh. 5 - Prob. 9ECh. 5 - Prob. 10ECh. 5 - Prob. 11ECh. 5 - Prob. 12ECh. 5 - Prob. 13ECh. 5 - Prob. 14ECh. 5 - Prob. 15ECh. 5 - Prob. 16ECh. 5 - Prob. 17ECh. 5 - Prob. 18ECh. 5 - Prob. 19ECh. 5 - Prob. 20ECh. 5 - Prob. 21ECh. 5 - Prob. 1PSACh. 5 - Prob. 2PSACh. 5 - Prob. 3PSACh. 5 - Problem 5-4AA Periodic: Alternative cost flows...Ch. 5 - Prob. 5PSACh. 5 - Prob. 6PSACh. 5 - Prob. 7PSACh. 5 - Prob. 8PSACh. 5 - Prob. 9PSACh. 5 - Prob. 10PSACh. 5 - Prob. 1PSBCh. 5 - Prob. 2PSBCh. 5 - Prob. 3PSBCh. 5 - Prob. 4PSBCh. 5 - Prob. 5PSBCh. 5 - Prob. 6PSBCh. 5 - Prob. 7PSBCh. 5 - Problem 5-8BA Periodic: Income comparisons and...Ch. 5 - Prob. 9PSBCh. 5 - Prob. 10PSBCh. 5 - Prob. 5SPCh. 5 - Prob. 1.1AACh. 5 - Prob. 1.2AACh. 5 - Prob. 1.3AACh. 5 - Prob. 1.4AACh. 5 - Prob. 2.1AACh. 5 - Prob. 2.2AACh. 5 - Prob. 2.3AACh. 5 - Prob. 3.1AACh. 5 - Prob. 3.2AACh. 5 - Prob. 3.3AACh. 5 - Describe how costs flow inventory to cost of goods...Ch. 5 - Where is the amount of merchandise inventory...Ch. 5 - Prob. 3DQCh. 5 - Prob. 4DQCh. 5 - Prob. 5DQCh. 5 - Prob. 6DQCh. 5 - What factors contribute to (or cause) inventory...Ch. 5 - Prob. 8DQCh. 5 - Prob. 1BTNCh. 5 - Prob. 2BTNCh. 5 - Prob. 3BTNCh. 5 - Prob. 5BTN
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