menu
bartleby
search
close search
Hit Return to see all results
close solutoin list

Periodic inventory by three methods Dymac Appliances uses the periodic inventory system. Details regarding the inventory of appliances at November 1, 2015, purchases invoices during the next 12 months, and the inventory count at October 31, 2016, are summarized as follows: Instructions 1. Determine the cost of the inventory on October 31, 2016, by the first-in, first-out method. Present data in columnar form, using the following headings: Model Quantity Unit Cost Total Cost 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 October 31, 2016, by the last-in, first-out method, following the procedures indicated in (1). 3. Determine the cost of the inventory on October 31, 2016, by the weighted average cost method, using the columnar headings indicated in (l). 4. Discuss which method (FIFO or LIFO) would be preferred for income tax purposes in periods of (a) rising prices and (b) declining prices.

BuyFindarrow_forward

Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285866307

Solutions

Chapter
Section
BuyFindarrow_forward

Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285866307
Chapter 6, Problem 6.5APR
Textbook Problem
5 views

Periodic inventory by three methods

Dymac Appliances uses the periodic inventory system. Details regarding the inventory of appliances at November 1, 2015, purchases invoices during the next 12 months, and the inventory count at October 31, 2016, are summarized as follows:

Chapter 6, Problem 6.5APR, Periodic inventory by three methods Dymac Appliances uses the periodic inventory system. Details

Instructions

  1. 1. Determine the cost of the inventory on October 31, 2016, by the first-in, first-out method. Present data in columnar form, using the following headings:
Model Quantity Unit Cost Total Cost

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.

  1. 2. Determine the cost of the inventory on October 31, 2016, by the last-in, first-out method, following the procedures indicated in (1).
  2. 3. Determine the cost of the inventory on October 31, 2016, by the weighted average cost method, using the columnar headings indicated in (l).
  3. 4. Discuss which method (FIFO or LIFO) would be preferred for income tax purposes in periods of (a) rising prices and (b) declining prices.

(1)

To determine

Periodic Inventory System:

Periodic inventory system 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.

First-in-First-Out:

In First-in-First-Out method, the costs of the initially purchased items are considered as cost of goods sold, for the items which are sold first. The value of the ending inventory consists of the recent purchased items.

Last-in-Last-Out:

In Last-in-First-Out method, the costs of last purchased items are considered as the cost of goods sold, for the items which are sold first. The value of the closing stock consists of the initial purchased items.

Weighted-average cost method:

Under Weighted average cost method, the company calculates a new average cost after every purchase is made. It is determined by dividing the cost of goods available for sale by the units on hand.

The value of inventory on October 31, 2016 using first in first out method under periodic inventory system.

Explanation of Solution

The tabular column showing inventory cost is presented as follows:

Model Quantity ($) Unit cost ($) Total cost ($)
A10 4 76 304
  2 70 140
B15 6 184 1,104
  2 170 340
E60

(2)

To determine

The value of inventory on October 31, 2016 using last in first out method under periodic inventory system.

(3)

To determine

The value of inventory on October 31, 2016 using weighted average method under periodic inventory system.

(4) (a)

To determine

To discuss: the method that would be preferred for income tax purposes in the period of rising prices.

(b)

To determine

To discuss: the method that would be preferred for income tax purposes in the period of declining prices.

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

Chapter 6 Solutions

Financial & Managerial Accounting
Show all chapter solutions
add
Ch. 6 - Cost flow methods The following three identical...Ch. 6 - Cost flow methods The following three identical...Ch. 6 - Perpetual inventory using FIFO Beginning...Ch. 6 - Perpetual inventory using FIFO Beginning...Ch. 6 - Perpetual inventory using UFO Beginning inventory,...Ch. 6 - Perpetual inventory using LIFO Beginning...Ch. 6 - Perpetual inventory using weighted average...Ch. 6 - Perpetual inventory using weighted average...Ch. 6 - Periodic inventory using FIFO, LIFO, and weighted...Ch. 6 - Periodic inventory using FIFO, UFO, and weighted...Ch. 6 - Lower-of-cost-or-market method On the basis of the...Ch. 6 - Lower-of-cost-or-market method On the basis of the...Ch. 6 - Effect of inventory errors During the taking of...Ch. 6 - Effect of inventory errors During the taking of...Ch. 6 - Inventory turnover and number of days' sales in...Ch. 6 - Inventory turnover and number of days' sales in...Ch. 6 - Control of inventories Triple Creek Hardware Store...Ch. 6 - Control of inventories Hardcase Luggage Shop is a...Ch. 6 - Perpetual inventory using FIFO Beginning...Ch. 6 - Perpetual inventory using LIFO Assume that the...Ch. 6 - Perpetual inventory using LIFO Beginning...Ch. 6 - Perpetual inventory using FIFO Assume that the...Ch. 6 - FIFO and LIFO costs under perpetual Inventory...Ch. 6 - Weighted average cost flow method under perpetual...Ch. 6 - Weighted average cost flow method under perpetual...Ch. 6 - Perpetual inventory using FIFO Assume that the...Ch. 6 - Perpetual inventory using LIFO Assume that the...Ch. 6 - Periodic inventory by three methods The units of...Ch. 6 - Periodic inventory by three methods; cost of...Ch. 6 - Comparing inventory methods Assume that a firm...Ch. 6 - Lower of cost or market inventory On the basis of...Ch. 6 - Merchandise inventory on the balance sheet Based...Ch. 6 - Effect of errors in physical inventory Missouri...Ch. 6 - Effect of errors in physical inventory Fonda...Ch. 6 - Error in inventory During 2016, the accountant...Ch. 6 - Inventory turnover The following data (in...Ch. 6 - Inventory turnover and number of days' sales in...Ch. 6 - Retail method A business using the retail method...Ch. 6 - Retail method A business using the retail method...Ch. 6 - Retail method A business using the retail method...Ch. 6 - Retail method On the basis of the following data,...Ch. 6 - Gross profit method The inventory was destroyed by...Ch. 6 - Gross profit method Based on the following data,...Ch. 6 - Gross profit method Based on the following data,...Ch. 6 - FIFO perpetual inventory The beginning inventory...Ch. 6 - LIFO perpetual inventory The beginning inventory...Ch. 6 - Weighted average cost method with perpetual...Ch. 6 - Periodic inventory by three methods The beginning...Ch. 6 - Periodic inventory by three methods Dymac...Ch. 6 - Lower-of-cost-or-market inventory Data on the...Ch. 6 - Retail method; gross profit method Selected data...Ch. 6 - FIFO perpetual inventory The beginning inventory...Ch. 6 - LIFO perpetual inventory The beginning inventory...Ch. 6 - Weighted average cost method with perpetual...Ch. 6 - Periodic inventory by three methods The beginning...Ch. 6 - Periodic inventory by three methods Pappa's...Ch. 6 - Lower-of-cost-or-market inventory Data on the...Ch. 6 - Retail method; gross project method Selected data...Ch. 6 - Ethics and professional conduct in business...Ch. 6 - LIFO and inventory flow The following is an...Ch. 6 - Costing inventory Golden Eagle Company begun...Ch. 6 - Inventory ratios for Dell and HP Dell Inc. and...Ch. 6 - Comparing inventory ratios for two companies...Ch. 6 - Comparing inventory ratios for three companies The...

Additional Business Textbook Solutions

Find more solutions based on key concepts
Show solutions add
What is the purpose of providing a ledger account for each account?

College Accounting (Book Only): A Career Approach

What is a server?

Accounting Information Systems

What are internal controls designed to do?

College Accounting (Book Only): A Career Approach

COST OF COMMON EQUITY WITH FLOTATION Ballack Co.s common stock currently sells for 46 75 per share. The growth ...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)