Concept explainers
Inventory by three cost flow methods
Details regarding the inventory of appliances on January 1, 20Y7, purchases invoices during the year, and the inventory count on December 31. 2O’7. of Amsterdam Appliances are summarized as follows:
Instructions
Determine the cost of the inventory on December 31, 20Y7, h the average cost method, using the columnar headings indicated in (1).
Concept Introduction:
Periodic Inventory System:
The periodic inventory system records and updates the inventory at the end of a particular period. The inventory balance is not updated after each transaction and it is updated periodically.
Average method:
Under this method, the cost per unit of the inventory is calculated as weighted average cost per unit and the cost of goods sold and inventory is calculated with the help of weighted average cost per unit.
The Cost of the ending inventory for each Model using Average Cost method
Answer to Problem 6.4.3P
The Cost of the ending inventory for each Model using Average Cost method is as follows:
Model | Quantity | Unit Cost | Total Cost |
A10 | 4 | $ 64 | $ 256 |
2 | $ 70 | $ 140 | |
$ 396 | |||
B15 | 8 | $ 176 | $ 1,408 |
E60 | 3 | $ 75 | $ 225 |
2 | $ 65 | $ 130 | |
$ 355 | |||
G83 | 7 | $ 242 | $ 1,694 |
2 | $ 250 | $ 500 | |
$ 2,194 | |||
J34 | 12 | $ 240 | $ 2,880 |
3 | $ 246 | $ 738 | |
$ 3,618 | |||
M90 | 20 | $ 108 | $ 2,160 |
2 | $ 110 | $ 220 | |
1 | $ 128 | $ 128 | |
$ 2,508 | |||
Q70 | 5 | $ 160 | $ 800 |
3 | $ 170 | $ 510 | |
$ 1,310 |
Explanation of Solution
The Cost of the ending inventory for each Model using Average Cost method is calculated as follows:
Model | Quantity | Unit Cost | Total Cost |
A10 | 4 | $ 64 | $ 256 |
2 | $ 70 | $ 140 | |
$ 396 | |||
B15 | 8 | $ 176 | $ 1,408 |
E60 | 3 | $ 75 | $ 225 |
2 | $ 65 | $ 130 | |
$ 355 | |||
G83 | 7 | $ 242 | $ 1,694 |
2 | $ 250 | $ 500 | |
$ 2,194 | |||
J34 | 12 | $ 240 | $ 2,880 |
3 | $ 246 | $ 738 | |
$ 3,618 | |||
M90 | 20 | $ 108 | $ 2,160 |
2 | $ 110 | $ 220 | |
1 | $ 128 | $ 128 | |
$ 2,508 | |||
Q70 | 5 | $ 160 | $ 800 |
3 | $ 170 | $ 510 | |
$ 1,310 |
Want to see more full solutions like this?
Chapter 6 Solutions
SURVEY OF ACCOUNTING W/ACCESS >BI<
- Inventory by three cost flow methods Details regarding the inventory of appliances on January 1, 20Y7, purchases invoices during the year, and the inventory count on December 31. 20Y7. of Amsterdam Appliances are summarized as follows: Instructions Determine the cost of the inventory on December 31, 2O7, by the first-in, first-out method. Present data in columnar form. using the following headings: If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase.arrow_forwardInventory by three cost flow methods Details regarding the inventory of appliances on January 1, 20Y7, purchases invoices during the year, and the inventory count on December 31. 2O’7. of Amsterdam Appliances are summarized as follows: Instructions Determine the Cost of the inventory on December 31, 20Y7, by the last-in. first-out method, following the procedures indicated in (1).arrow_forwardInventory by three cost flow methods Details regarding the inventory of appliances on January 1, 20Y7, purchases invoices during the year, and the inventory count on December 31. 2O’7. of Amsterdam Appliances are summarized as follows: Instructions Discuss which method (FIFO or LIFO) would be preferred for income tax purposes in periods of (a) rising prices and (b) declining prices.arrow_forward
- FIFO perpetual inventory The beginning inventory at Dunne Co. and data on purchases and sales for a three-month period ending June 30 are as follows: Instructions 1. Record the inventory, purchases, and cost of goods sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3, using the first-in, first-out method. 2. Determine the total sales and the total cost of goods sold for the period. Journalize the entries in the sales and cost of goods sold accounts. Assume that all sales were on account. 3. Determine the gross profit from sales for the period. 4. Determine the ending inventory cost on June 30. 5. Based upon the preceding data, would you expect the ending inventory using the last-in, first-out method to be higher or lower?arrow_forwardPERPETUAL: LIFO AND MOVING-AVERAGE Kelley Company began business on January 1, 20-1. Purchases and sales during the month of January follow. REQUIRED Calculate the total amount to be assigned to cost of goods sold for January and the ending inventory on January 31, under each of the following methods: 1. Perpetual LIFO inventory method. 2. Perpetual moving-average inventory method.arrow_forwardLIFO perpetual inventory The beginning inventory for Dunne Co. and data on purchases and sales for a three-month period are shown in Problem 6-1B. Instructions 1. Record the inventory, purchases, and cost of goods sold data in a perpetual inventory record similar to the one illustrated in Exhibit 4, using the last-in, first-out method. 2. Determine the total sales, the total cost of goods sold, and the gross profit from sales for the period. 3. Determine the ending inventory cost on June 30.arrow_forward
- Pappas Appliances uses the periodic inventory system. Details regarding the inventory of appliances at January 1, purchases invoices during the year, and the inventory count at December 31 are summarized as follows: Instructions 1. Determine the cost of the inventory on December 31 by the first-in, first-out method. Present data in columnar form, using the following headings: If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase. 2. Determine the cost of the inventory on December 31 by the last-in, first-out method, following the procedures indicated in (1). 3. Determine the cost of the inventory on December 31 by the weighted average cost method, using the columnar headings indicated in (1). 4. Discuss which method (FIFO or LIFO) would be preferred for income tax purposes in periods of (a) rising prices and (b) declining prices.arrow_forwardBeginning inventory, purchases, and sales for Item ProX2 are as follows: Assuming a perpetual inventory system and using the first-in, first-out (FIFO) method, determine (a) the cost of merchandise sold on January 25 and (b) the inventory on January 31.arrow_forwardBeginning inventory, purchases, and sales for Item Foxtrot are as follows: Assuming a perpetual inventory system and using the last-in, first-out (LIFO) method, determine (a) the cost of merchandise sold on March 27 and (b) the inventory on March 31.arrow_forward
- Calculate the cost of goods sold dollar value for B74 Company for the sale on November 20, considering the following transactions under three different cost allocation methods and using perpetual inventory updating. Provide calculations for (a) first-in, first-out (FIFO); (b) last-in, first-out (LIFO); and (c) weighted average (AVG).arrow_forwardDymac Appliances uses the periodic inventory system. Details regarding the inventory of appliances at January 1, purchases invoices during the next 12 months, and the inventory count at December 31 are summarized as follows: Instructions 1. Determine the cost of the inventory on December 31 by the first-in, first-out method. Present data in columnar form, using the following headings: If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase. 2. Determine the cost of the inventory on December 31 by the last-in, first-out method, following the procedures indicated in (1). 3. Determine the cost of the inventory on December 31 by the weighted average cost method, using the columnar headings indicated in (1). 4. Discuss which method (FIFO or LIFO) would be preferred for income tax purposes in periods of (a) rising prices and (b) declining prices.arrow_forwardCalculate the cost of goods sold dollar value for A74 Company for the sale on March 11, considering the following transactions under three different cost allocation methods and using perpetual inventory updating. Provide calculations for (a) first-in, first-out (FIFO); (b) last-in, first-out (LIFO); and (c) weighted average (AVG).arrow_forward
- Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage LearningFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningCollege Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,