FUNDAMENTAL ACCT PRIN CONNECT ACCESS
FUNDAMENTAL ACCT PRIN CONNECT ACCESS
24th Edition
ISBN: 9781266494604
Author: Wild
Publisher: MCG
bartleby

Concept explainers

bartleby

Videos

Question
Book Icon
Chapter 6, Problem 4APSA
To determine

The Number of Ending Inventory Units.

Expert Solution
Check Mark

Explanation of Solution

The ending Inventory units is a difference between units of goods available for sale and units sold and has been computed as under:

    Ending Inventory Units


    UNITS
    Units Available for sale
    1800
    Purchase

    15-Mar
    800
    10-Sep
    600
    Ending Inventory Units
    400

Requirement 3-a:

First in First Out:

The first in first out method of assigning the cost to goods sold is based on the principle that the goods that are entered first in the store room shall be issued first for sale and hence the cost shall be recorded at its initial prices of goods entered in store room. The periodic Inventory system means the records are maintained only at the end of period.

To determine

The Cost assigned to ending Inventory under FIFO.

Expert Solution
Check Mark

Explanation of Solution

The FIFO method of period inventory suggests that the goods issued for sale on a particular date shall be assigned cost on the basis of cost of oldest material lies in the store during the end of period.

The Ending Inventory shall be computed as under:

    STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC FIFO METHOD

    RECIEPTS
    COST OF GOODS GOODS SOLD
    BALANCE
    DATE
    UNITS
    RATE
    AMOUNT $
    UNITS
    RATE
    AMOUNT $
    UNITS
    RATE
    AMOUNT $
    Balance Oct1
    600
    45
    27000
    600
    45
    27000



    Purchase









    10-Feb
    400
    42
    16800
    400
    42
    16800



    13-Mar
    200
    27
    5400
    200
    27
    5400



    21-Aug
    100
    50
    5000
    100
    50
    5000



    5-Sep
    500
    46
    23000
    100
    46
    4600
    400
    46
    18400
    TOTAL
    1800

    77200
    1400

    58800
    400

    18400

Therefore, Ending Inventory is 400 units of $18400.

Requirement 3-b:

Last in First Out:

The Last in first out method of assigning the cost to goods sold is based on the principle that the goods that are entered recently in the store room shall be issued first for sale and hence the cost shall be recorded at its recent prices of goods entered in store room. The periodic Inventory system means the records are maintained at the end of period.

To determine

The Cost assigned to ending Inventory under LIFO.

Expert Solution
Check Mark

Explanation of Solution

The LIFO method of periodic inventory suggests that the goods issued for sale on a particular date shall be assigned cost on the basis of cost of newest material lies in the store at the end of period.

The Ending Inventory shall be computed as under:

    STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC LIFO METHOD

    RECIEPTS
    COST OF GOODS GOODS SOLD
    BALANCE
    DATE
    UNITS
    RATE
    AMOUNT $
    UNITS
    RATE
    AMOUNT $
    UNITS
    RATE
    AMOUNT $
    Balance Oct1
    600
    45
    27000
    200
    45
    9000
    400
    45
    18000
    Purchase









    10-Feb
    400
    42
    16800
    400
    42
    16800



    13-Mar
    200
    27
    5400
    200
    27
    5400



    21-Aug
    100
    50
    5000
    100
    50
    5000



    5-Sep
    500
    46
    23000
    500
    46
    23000



    TOTAL
    1800

    77200
    1400

    59200
    400
    45
    18000

Therefore, Ending Inventory is 400 units of $18000.

Requirement 3-c:

Weighted Average:

The Weighted Average method of issuing inventory is based on principle that the goods shall be issued at an average of prices of goods which are lying in the store room at the end of period. The periodic Inventory system means the records are maintained at the end of period.

To determine

The Cost assigned to ending Inventory under Weighted average.

Expert Solution
Check Mark

Explanation of Solution

The Weighted Average method of periodic inventory suggests that the goods issued for sale on a particular date shall be assigned cost on the basis of average cost of material lies in the store during the period.

The Ending Inventory shall be computed as under:

    STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC WEIGHTED AVERAGE METHOD

    RECIEPTS
    COST OF GOODS GOODS SOLD
    BALANCE
    DATE
    UNITS
    RATE
    AMOUNT $
    UNITS
    RATE
    AMOUNT $
    UNITS
    RATE
    AMOUNT $
    Balance Oct1
    600
    45
    27000






    Purchase









    10-Feb
    400
    42
    16800






    13-Mar
    200
    27
    5400






    21-Aug
    100
    50
    5000






    5-Sep
    500
    46
    23000






    TOTAL
    1800
    42.89
    77200
    1400
    42.89
    60046
    400
    42.89
    17156

Therefore, Ending Inventory is 400 units of $17156.

Requirement 3-d:

Specific Identification:

Specific Identification method of assigning the cost to goods sold is based on the principle that the goods that have been issued for sale has been specifically identified to be issued from the particular lot of material. Therefore, the cost of that particular lot shall be assigned on the same. The periodic Inventory system means the records are maintained at the end of period.

To determine

The Cost assigned to ending Inventory under Specific Identification.

Expert Solution
Check Mark

Explanation of Solution

The Specific Identification method of periodic inventory suggests that the goods issued for sale on a particular date shall be assigned cost on the basis of cost of material specifically identified as issued from the store at the end of period.

The Ending Inventory shall be computed as under:

    STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC SPECIFIC IDENTIFICATION METHOD

    RECIEPTS
    COST OF GOODS GOODS SOLD
    BALANCE
    DATE
    UNITS
    RATE
    AMOUNT $
    UNITS
    RATE
    AMOUNT $
    UNITS
    RATE
    AMOUNT $
    Balance Oct1
    600
    45
    27000
    600
    45
    27000



    Purchase









    10-Feb
    400
    42
    16800
    300
    42
    12600
    100
    42
    4200
    13-Mar
    200
    27
    5400
    200
    27
    5400



    21-Aug
    100
    50
    5000
    50
    50
    2500
    50
    50
    2500
    5-Sep
    500
    46
    23000
    250
    46
    11500
    250
    46
    11500
    TOTAL
    1800

    77200
    1400

    59000
    400

    18200

Therefore, Ending Inventory is 400 units of $18200.

Requirement 4:

Gross Profits:

Gross Profits means excess of sales revenue over the cost of goods sold.

To determine

Gross profits earned by the company under various methods.

Expert Solution
Check Mark

Explanation of Solution

The Gross profits is computed as a difference between the sales revenue and cost of goods sold as assigned under various methods and has been computed as under:

FUNDAMENTAL ACCT PRIN CONNECT ACCESS, Chapter 6, Problem 4APSA

Requirement 5:

To determine

The Method to be preferred so as to generate higher bonus.

Expert Solution
Check Mark

Explanation of Solution

As the bonus is based on gross profit, the method shall be preferred which will give provide lowest cost of goods sold. Therefore, as per above computations, the FIFO method shall be followed as its gives the lowest cost of goods sold and resultant higher gross profit.

The FIFO method of Inventory valuation shall be preferred.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Chapter 6 Solutions

FUNDAMENTAL ACCT PRIN CONNECT ACCESS

Ch. 6 - Prob. 11DQCh. 6 - Prob. 12DQCh. 6 - Inventory ownership Homestead Crafts, a...Ch. 6 - QS 6-2 Inventory costs C2 A car dealer acquires a...Ch. 6 - Prob. 3QSCh. 6 - Perpetual: Inventory costing with FIFO P1 A...Ch. 6 - Perpetual: Inventory costing with LIFO Refer to...Ch. 6 - Perpetual Inventory costing with weighted average...Ch. 6 - Periodic: Inventory costing with FIFO P3 Refer to...Ch. 6 - Periodic: Inventory costing with LIFO Refer to the...Ch. 6 - Periodic: Inventory costing with weighted average...Ch. 6 - Perpetual: Assigning costs with FIFO Trey Monson...Ch. 6 - QS6-11 Perpetual Inventory costing with LIFO Refer...Ch. 6 - QS 6-12 Perpetual: Inventory costing with weighted...Ch. 6 - QS6.13 Perpetual Inventory costing with specific...Ch. 6 - Periodic: Inventory costing with FIFO P3 Refer to...Ch. 6 - Periodic Inventory costing with LIFO P3 Refer to...Ch. 6 - Periodic: Inventory costing with weighted average...Ch. 6 - Periodic: Inventory costing with specific...Ch. 6 - QS 6-18 Contrasting inventory costing methods...Ch. 6 - Prob. 19QSCh. 6 - Inventory errors A2 In taking a physical inventory...Ch. 6 - Analyzing inventory A3 Endor Company begins the...Ch. 6 - Prob. 22QSCh. 6 - Inventory costs C2 A solar panel dealer acquires a...Ch. 6 - Exercise 6-1 Inventory ownership C1 1. At...Ch. 6 - Exercise 6-2 Inventory costs C2 Walberg...Ch. 6 - Exercise 6-3 Perpetual Inventory costing methods...Ch. 6 - Exercise 6-4 Perpetual: Income effects of...Ch. 6 - Exercise 6-5A Periodic: Inventory costing P3 Refer...Ch. 6 - Exercise 6-6A Periodic: Income effects of...Ch. 6 - Exercise 6-7 Perpetual Inventory costing...Ch. 6 - Exercise 6.8 Specific identification Refer to the...Ch. 6 - Prob. 9ECh. 6 - Prob. 10ECh. 6 - Prob. 11ECh. 6 - Prob. 12ECh. 6 - Exercise 6-13 Inventory turnover and days' sales...Ch. 6 - Prob. 14ECh. 6 - Prob. 15ECh. 6 - Prob. 16ECh. 6 - Prob. 17ECh. 6 - Exercise 6-1E Perpetual inventory costing P1 Tree...Ch. 6 - Exercise 6-19APeriodic inventory costing P3 I...Ch. 6 - Problem 6-1A Perpetual: Alternative cost...Ch. 6 - Prob. 2APSACh. 6 - Prob. 3APSACh. 6 - Prob. 4APSACh. 6 - Problem 6-5A Lower of cost or market P2 A physical...Ch. 6 - Prob. 6APSACh. 6 - Prob. 7APSACh. 6 - Prob. 8APSACh. 6 - Prob. 9APSACh. 6 - Prob. 10APSACh. 6 - Prob. 1BPSBCh. 6 - Prob. 2BPSBCh. 6 - Prob. 3BPSBCh. 6 - Prob. 4BPSBCh. 6 - Prob. 5BPSBCh. 6 - Prob. 6BPSBCh. 6 - Prob. 7BPSBCh. 6 - Prob. 8BPSBCh. 6 - Prob. 9BPSBCh. 6 - Prob. 10BPSBCh. 6 - Prob. 6SPCh. 6 - AA 6-1 Use Apple's financial statements in...Ch. 6 - AA 6-2 Comparative figures for Apple and Google...Ch. 6 - Prob. 3AACh. 6 - BTN 6-3 Golf Challenge Corp. is a retail sports...Ch. 6 - Prob. 2BTNCh. 6 - Prob. 3BTNCh. 6 - Prob. 4BTNCh. 6 - Prob. 5BTNCh. 6 - Prob. 6BTN
Knowledge Booster
Background pattern image
Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Text book image
FINANCIAL ACCOUNTING
Accounting
ISBN:9781259964947
Author:Libby
Publisher:MCG
Text book image
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Text book image
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Text book image
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Text book image
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Text book image
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
Chapter 6 Merchandise Inventory; Author: Vicki Stewart;https://www.youtube.com/watch?v=DnrcQLD2yKU;License: Standard YouTube License, CC-BY
Accounting for Merchandising Operations Recording Purchases of Merchandise; Author: Socrat Ghadban;https://www.youtube.com/watch?v=iQp5UoYpG20;License: Standard Youtube License