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Concept explainers
Periodic Inventory System: It is a system in which the inventory is updated in the accounting records on a periodic basis such as at the end of each month, quarter or year. In other words, it is an accounting method which is used to determine the amount of inventory at the end of each accounting period.
In Weighted-Average Cost Method the cost of inventory is priced at the average rate of the goods available for sale. Following is the mathematical representation:
To Explain: When a business compute a new weighted-average cost per unit under periodic inventory system.
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Chapter 6 Solutions
Horngren's Financial & Managerial Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (6th Edition)
- Considering the following information, and applying the lower-of-cost-or-market approach, what is the correct value that should be reported on the balance sheet for the inventory?arrow_forwardWhat are two advantages and disadvantages of the periodic inventory system?arrow_forwardDescribe costing inventory using weighted average. Address the different treatment, if any, that must be given for periodic and perpetual inventory updating.arrow_forward
- The following information is taken from a companys records. Applying the lower-of-cost-or-market approach, what is the correct value that should be reported on the balance sheet for the inventory?arrow_forwardWhy do companies adopt the LIFO method of inventory costing? Your discussion should include the effects on the income statement and balance sheet.arrow_forwardWhen would a company use the specific identification method of inventory cost allocation?arrow_forward
- When inventory items are highly specialized, the best inventory costing method is ________. A. specific identification B. first-in, first-out C. last-in, first-out D. weighted averagearrow_forwardUse the weighted-average (AVG) cost allocation method, with perpetual inventory updating, to calculate (a) sales revenue, (b) cost of goods sold, and c) gross margin for B75 Company, considering the following transactions.arrow_forward
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