FINANCIAL ACCOUNTING:TOOLS FOR BUSINESS
19th Edition
ISBN: 9781119493624
Author: Kimmel
Publisher: WILEY
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 6, Problem 6.3aDIE
To determine
Lower-of-cost-or-market: The lower-of-cost-or-market (LCM) is a method which requires the reporting of the ending merchandise inventory in the financial statement of a company, at its current market value or at is historical cost price, whichever is less.
To Compute: The lower-of-cost-or-market valuation for the company’s inventory.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Tariq Company is a multiproduct firm. Presented below is information concerning one of its products, the Jayhawk
Date Transaction Quantity Unit Cost
1/1 Beginning inventory 1,100 OMR12
2/4 Purchase 2,200 18
2/20 Sale 2,800 30
4/2 Purchase 3,100 23
11/4 Sale 2,300 33
Instructions: Compute cost of goods sold, assuming Tariq uses periodic system, FIFO cost flow.
Bonita Company is a multiproduct firm. Presented below is information concerning one of its products, the Hawkeye.
Date
Transaction
Quantity
Price/Cost
1/1
Beginning inventory
1,900
$15
2/4
Purchase
2,900
23
2/20
Sale
3,400
38
4/2
Purchase
3,900
29
11/4
Sale
3,100
42
Calculate average-cost per unit. (Round answer to 4 decimal places, e.g. 2.7613.)
Average-cost per unit
$
Compute cost of goods sold, assuming Bonita uses: (Round average cost per unit to 4 decimal places, e.g. 2.7631 and final answers to 0 decimal places, e.g. 6,548.)
Cost of goods sold
(a)
Periodic system, FIFO cost flow
$
(b)
Perpetual system, FIFO cost flow
$
(c)
Periodic system, LIFO cost flow
$
(d)
Perpetual system, LIFO cost flow
$
(e)
Periodic system, weighted-average cost flow
$
(f)
Perpetual system, moving-average cost flow
$
Metlock Company is a multiproduct firm. Presented below is information concerning one of its products, the Hawkeye.
Date
Transaction
Quantity
Price/Cost
1/1
Beginning inventory
2,000
$15
2/4
Purchase
3,000
23
2/20
Sale
3,500
38
4/2
Purchase
4,000
29
11/4
Sale
3,200
42
Compute cost of goods sold, assuming Metlock uses: (Round average cost per unit to 4 decimal places, e.g. 2.7631 and final answers to 0 decimal places, e.g. 6,548.)
Cost of goods sold
(a)
Periodic system, FIFO cost flow
$
(b)
Perpetual system, FIFO cost flow
$
(c)
Periodic system, LIFO cost flow
$
(d)
Perpetual system, LIFO cost flow
$
(e)
Periodic system, weighted-average cost flow
$
(f)
Perpetual system, moving-average cost flow
$
Chapter 6 Solutions
FINANCIAL ACCOUNTING:TOOLS FOR BUSINESS
Ch. 6 - The key to successful business operations is...Ch. 6 - Prob. 2QCh. 6 - What is just-in-time inventory management? What...Ch. 6 - Prob. 4QCh. 6 - Prob. 5QCh. 6 - Prob. 6QCh. 6 - Prob. 7QCh. 6 - Prob. 8QCh. 6 - What is the major advantage and major disadvantage...Ch. 6 - The selection of an inventory cost flow method is...
Ch. 6 - Which assumed inventory cost flow method: (a)...Ch. 6 - Prob. 12QCh. 6 - Prob. 13QCh. 6 - Prob. 14QCh. 6 - Prob. 15QCh. 6 - Prob. 16QCh. 6 - Prob. 17QCh. 6 - Prob. 18QCh. 6 - Why is it inappropriate for a company to include...Ch. 6 - Prob. 20QCh. 6 - Prob. 21QCh. 6 - Prob. 22QCh. 6 - When perpetual inventory records are kept, the...Ch. 6 - How does the average-cost method of inventory...Ch. 6 - Prob. 6.1BECh. 6 - Prob. 6.3BECh. 6 - Prob. 6.4BECh. 6 - Prob. 6.6BECh. 6 - Prob. 6.7BECh. 6 - Prob. 6.8BECh. 6 - Prob. 6.9BECh. 6 - Prob. 6.10BECh. 6 - Prob. 6.11BECh. 6 - Prob. 6.12BECh. 6 - Prob. 6.1DIECh. 6 - Prob. 6.2DIECh. 6 - Prob. 6.3aDIECh. 6 - Prob. 6.1ECh. 6 - Prob. 6.2ECh. 6 - Prob. 6.3ECh. 6 - Prob. 6.4ECh. 6 - Prob. 6.5ECh. 6 - Prob. 6.6ECh. 6 - Prob. 6.7ECh. 6 - Prob. 6.9ECh. 6 - Prob. 6.10ECh. 6 - Inventory data for Jeters Company are presented in...Ch. 6 - Prob. 6.15ECh. 6 - Prob. 6.2APCh. 6 - Prob. 6.3APCh. 6 - Prob. 6.6APCh. 6 - Prob. 6.7APCh. 6 - Prob. 6.9APCh. 6 - Prob. 6.3EYCTCh. 6 - The July 15, 2010, edition of CFO.com contains an...Ch. 6 - Prob. 6.8EYCTCh. 6 - Prob. 6.9EYCTCh. 6 - Prob. 6.10EYCTCh. 6 - Prob. 6.11EYCTCh. 6 - Prob. 6.1IECh. 6 - Prob. 6.2IECh. 6 - Prob. 6.3IE
Knowledge Booster
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.Similar questions
- What is true in explaining ABC analysis? This process divides items into three classes according to their inventory level Class A items normally have the least dollar usages Class B and class C account for most of inventory items but not dollar usages Class C accounts for the largest dollar usage of any class Which one of the following is a reason to have small inventories? To improve customer service To reduce ordering costs To reduce equipment setup costs To reduce interest expense or opportunity costsarrow_forwardThe product cost for a merchandising retailer or wholesaler includes: i. all of the costs incurred to manufacture the productsii. shipping costs paid by the company selling goods to the retailer or wholesaleriii. shipping costs paid by the acquiring retailer or wholesaler for inventoryiv. purchase cost of inventoryarrow_forwardInventory Valuation under Absorption Costing Refer to the data for Judson Company above. Required: 1. How many units are in ending inventory? 2. Using absorption costing, calculate the per-unit product cost. 3. What is the value of ending inventory under absorption costing? Use the following information for Brief Exercises 3-21 and 3-22: During the most recent year, Judson Company had the following data associated with the product it makes:arrow_forward
- Which of the following represents the components of the income statement for a merchandising business? A. Sales Revenue - Cost of Goods Sold = gross profit B. Service Revenue - Operating Expenses = gross profit C. Sales Revenue - Cost of Goods Manufactured = gross profit D. Service Revenue - Cost of Goods Purchased = gross profitarrow_forwardWhy do companies adopt the LIFO method of inventory costing? Your discussion should include the effects on the income statement and balance sheet.arrow_forwarda) What is the selling price per mask if Personal Protective Gears manufactured 1,850 masks for theperiod under review and uses a mark-up of 25% on cost? b) How does the format of the income statement for a manufacturing concern differ from the incomestatement of a merchandising entity?arrow_forward
- The following information is included below for Golden Gadgets: Raw Materials Inventory $7,500, COGS(Product) $42,140, Depreciation $11,253, Work-in-Process inventory $13,489, Cash $19,710, Revenues (Product) $105,328, SG&A $6,840, Finished Goods Inventory $18,190, Accounts Receivable $7,140. Compute the Gross Margin for Golden Gadgetsarrow_forwardPetroleum, pharmaceutical, chemical, and other large manufacturing companies are more likely to use this inventory cost flow assumption, than companies operating in other industries. Multiple Choice LIFO FIFO Weighted-average LCMarrow_forwardWhich of the following represents the components of the income statement for a merchandising business? Select one: a. Service Revenue – Operating Expenses = gross profit b. Sales Revenue – Cost of Goods Sold = gross profit c. Service Revenue – Cost of Goods Purchased = gross profit d. Sales Revenue – Cost of Goods Manufactured = gross profitarrow_forward
- Manufacturing firms must calculate their cost of goods sold based on how much they manufacture and how much it costs them to manufacture those goods. This requires manufacturing firms to prepare an additional statement before they can prepare their income statement. This additional statement is the Cost of Goods Manufactured statement. Once the cost of goods manufactured is calculated, the cost is then incorporated into the manufacturing firm’s income statement to calculate its cost of goods sold. One thing manufacturing firms must consider in their cost of goods manufactured is that, at any given time, they have products at varying levels of production: some are finished and others are still process. The cost of goods manufactured statement measures the cost of the goods actually finished during the period, whether or not they were started during that period. True / False Even though the income statements for the merchandising firm and the manufacturing firm appear very similar at…arrow_forwardFor each of the following items, identify which of the managementaccounting guidelines applies: cost–benefit approach, behavioral and technical considerations, ordifferent costs for different purposes.1. Analyzing whether to produce a component needed for the end product or to outsource it.2. Deciding whether to compensate the sales force by straight commission or by salary.3. Adding the cost of store operations to merchandise cost when deciding on product pricing, but onlyincluding the cost of freight and the merchandise itself when calculating cost of goods sold on theincome statement.4. Considering the desirability of purchasing new technology.5. Weighing the cost of increased inspection against the costs associated with customer returns of defectivegoods.6. Deciding whether to buy or lease an existing production facility to increase capacity.7. Estimating the loss of future business resulting from bad publicity related to an environmental disastercaused by a company’s factory in…arrow_forwardManagement accounting guidelines. For each of the following items, identify which of the management accounting guidelines applies: cost–benefit approach, behavioral and technical considerations, or different costs for different purposes. Analyzing whether to produce a component needed for the end product or to outsource it. Deciding whether to compensate the sales force by straight commission or by salary. Adding the cost of store operations to merchandise cost when deciding on product pricing, but only including the cost of freight and the merchandise itself when calculating cost of goods sold on the income statement. Considering the desirability of purchasing new technology. Weighing the cost of increased inspection against the costs associated with customer returns of defective goods. Deciding whether to buy or lease an existing production facility to increase capacity. Estimating the loss of future business resulting from bad publicity related to an environmental disaster caused…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegePrinciples of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
The ACCOUNTING EQUATION For BEGINNERS; Author: Accounting Stuff;https://www.youtube.com/watch?v=56xscQ4viWE;License: Standard Youtube License