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Periodic inventory by three methods Pappa’s 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: Purchases Invoices Model Inventory, January 1 1 st 2nd 3rd Inventory Count, December 31 C55 3 at $1,040 3 at $1,054 3 at $1,060 3 at $1,070 4 D11 9at 639 7 at 645 6 at 666 6at 675 11 F32 5 at 240 3 at 260 1 at 260 1 at 280 2 H29 6 at 305 3 at 310 3 at 316 4 at 317 4 K47 6at 520 8 at 531 4at 549 6 at 542 8 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 an-other 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.

BuyFind

Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207
BuyFind

Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207

Solutions

Chapter
Section
Chapter 6, Problem 6.5BPR
Textbook Problem

Periodic inventory by three methods

Pappa’s 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:

    Purchases Invoices  
Model Inventory, January 1 1 st 2nd 3rd Inventory Count, December 31
C55 3 at $1,040 3 at $1,054 3 at $1,060 3 at $1,070 4
D11 9at 639 7 at 645 6 at 666 6at 675 11
F32 5 at 240 3 at 260 1 at 260 1 at 280 2
H29 6 at 305 3 at 310 3 at 316 4 at 317 4
K47 6at 520 8 at 531 4at 549 6 at 542 8

Instructions

  1. 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:

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

    If the inventory of a particular model comprises one entire purchase plus a portion of an-other purchase acquired at a different unit cost, use a separate line for each purchase.

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

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Chapter 6 Solutions

Financial & Managerial Accounting
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