BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

Solutions

Chapter
Section
BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
10 views

Inventory Costing Methods

Crandall Distributors uses a perpetual inventory system and has the following data available for inventory, purchases, and sales for a recent year.

Chapter 6, Problem 50E, Inventory Costing Methods Crandall Distributors uses a perpetual inventory system and has the

Required:

1. Compute the cost of ending inventory and the cost of goods sold using the specific identification method. Assume the ending inventory is made up of 40 units from beginning inventory, 30 units from Purchase 1, 80 units from Purchase 2, and 40 units from Purchase 3.

2. Compute the cost of ending inventory and cost of goods sold using the FIFO inventory costing method.

3. Compute the cost of ending inventory and cost of goods sold using the LIFO inventory costing method.

4. Compute the cost of ending inventory and cost of goods sold using the average cost inventory costing method. ( Note: Use four decimal places for per-unit calculations and round all other numbers to the nearest dollar.)

5. CONCEPTUAL CONNECTION Compare the ending inventory and cost of goods sold computed under all four methods. What can you conclude about the effects of the inventory costing methods on the balance sheet and the income statement?

To determine

(a)

Inventory costing methods:

FIFO, LIFO and average cost method, are those method which used for calculation of closing inventory and cost of goods sold.

The cost of ending inventory and the cost of goods sold using the specific identification method.

Explanation

The given information is as follows:

Total available units are:

Opening inventory=110 units @ $7.10 each

Purchases=575 units @ $7.20 eachPurchases=680 units @ $7.50 eachPurchases=230 units @ $7.70 each

Total Purchased units = 1485

Total available quantity = (1485+110)= 1595 units

Sales=1405 units

Closing inventory =Beginning inventory + PurchaseSales=110+14851405=190 units

Calculation of Closing Inventory as per specific identification Method:

Under this method, closing inventory is provided to be valued.

Closing inventory Cost of Goods sold
70 units @ $7
To determine

(b)

Inventory costing methods:

FIFO, LIFO and average cost method, are those method which used for calculation of closing inventory and cost of goods sold.

The cost of ending inventory and the cost of goods sold using the FIFO.

To determine

(c)

Inventory costing methods:

FIFO, LIFO and average cost method, are those method which used for calculation of closing inventory and cost of goods sold.

The cost of ending inventory and the cost of goods sold using the LIFO.

To determine

(d)

Inventory costing methods:

FIFO, LIFO and average cost method, are those method which used for calculation of closing inventory and cost of goods sold.

The cost of ending inventory and the cost of goods sold using the average cost method.

To determine

(e)

Inventory costing methods:

FIFO, LIFO and average cost method, are those method which used for calculation of closing inventory and cost of goods sold.

The comparison of ending inventory and cost of goods sold and comment the effects of these on income statement and balance sheet.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What is game theory? Identify two applications of game theory.

Principles of Information Systems (MindTap Course List)

How would you model Question 6 with an OODM? (Use Figure 2.4 as your guide.)

Database Systems: Design, Implementation, & Management

What does the relative magnitude of second moment of area represent?

Engineering Fundamentals: An Introduction to Engineering (MindTap Course List)

What taper turning methods allow use of the lathes power feed?

Precision Machining Technology (MindTap Course List)

Why would a systems analyst have to act as a translator? What groups might be involved?

Systems Analysis and Design (Shelly Cashman Series) (MindTap Course List)

Name uses of cloud storage. Explain criteria for evaluating cloud storage providers.

Enhanced Discovering Computers 2017 (Shelly Cashman Series) (MindTap Course List)