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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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The costs of which units of cost of goods available for sale (earliest or most recent) are allocated to ending inventory and cost of goods sold under the FIFO, average cost, and LIFO cost flow assumptions?

To determine

Identify the cost of which units of cost of goods available for sale are allocated to the ending inventory and cost of goods sold under the FIFO, average cost and LIFO method.

Explanation

Cost of goods sold:

Cost of goods sold is the total of all the expenses incurred by a company to sell the goods during the given period.

The costs are allocated to the ending inventory as shown below:

  • FIFO Method:

    The most recent costs are recorded for the ending inventory under the FIFO method.

  • Average Cost Method:

    The average cost of the goods available for sale are recorded for the ending inventory under the average cost method.

  • LIFO Method:

    The earliest costs are recorded for the ending inventory under the LIFO method...

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