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AccountingAccounting (Text Only)26th Edition

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Chapter 7, Problem 7.4APR
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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

Solutions

Chapter
Section
Problem 1DQ
Problem 2DQ
Problem 3DQ
Problem 4DQ
Problem 5DQ
Problem 6DQ
Problem 7DQ
Problem 8DQ
Problem 9DQ
Problem 10DQ
Problem 7.1APE
Problem 7.1BPE
Problem 7.2APE
Problem 7.2BPE
Problem 7.3APE
Problem 7.3BPE
Problem 7.4APE
Problem 7.4BPE
Problem 7.5APE
Problem 7.5BPE
Problem 7.6APE
Problem 7.6BPE
Problem 7.7APE
Problem 7.7BPE
Problem 7.8APE
Problem 7.8BPE
Problem 7.1EX
Problem 7.2EX
Problem 7.3EX
Problem 7.4EX
Problem 7.5EX
Problem 7.6EX
Problem 7.7EX
Problem 7.8EX
Problem 7.9EX
Problem 7.10EX
Problem 7.11EX
Problem 7.12EX
Problem 7.13EX
Problem 7.14EX
Problem 7.15EX
Problem 7.16EX
Problem 7.17EX
Problem 7.18EX
Problem 7.19EX
Problem 7.20EX
Problem 7.21EX
Problem 7.22EX
Problem 7.23EX
Problem 7.24EX
Problem 7.25EX
Problem 7.26EX
Problem 7.27EX
Problem 7.28EX
Problem 7.1APR
Problem 7.2APR
Problem 7.3APR
Problem 7.4APR
Problem 7.5APR
Problem 7.6APR
Problem 7.7APR
Problem 7.1BPR
Problem 7.2BPR
Problem 7.3BPR
Problem 7.4BPR
Problem 7.5BPR
Problem 7.6BPR
Problem 7.7BPR
Problem 7.1CP
Problem 7.2CP
Problem 7.3CP
Problem 7.4CP
Problem 7.5CP
Problem 7.6CP
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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
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Periodic inventory by three methods

The beginning inventory for Funky Party Supplies and data on purchases and sales for a three-month period are shown in Problem 7-1A.

Instructions

1. Determine the inventory on March 31, 2016, and the cost of goods sold for the three month period, using the first-in, first-out method and the periodic inventory system.

2. Determine the inventory on March 31, 2016, and the cost of goods sold for the three month period, using the last-in, first-out method and the periodic inventory system.

(Continued)

3. Determine the inventory on March 31, 2016, and the cost of goods sold for the three month period, using the weighted average cost method and the periodic inventory system. Round the weighted average unit cost to the nearest cent.

4. Compare the gross profit and the March 31, 2016, inventories, using the following column headings:

Chapter 7, Problem 7.4APR, Periodic inventory by three methods The beginning inventory for Funky Party Supplies and data on

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.

value of inventory on March 31, 2016 and cost of merchandise sold using first in first out method under periodic inventory system.

Explanation

The value of ending inventory on March 31, 2016 is calculated as follows:

Ending Inventory(FIFO) =(2,500 units×$72)+(1,250 units×$71.60)=  $180,000+$89,500=$269,500

Calculate the cost of merchandise sold is as follows:

Details Amount ($)
Beginning inventory, January 1, 2016 150,000
Add: Purchases                      (Refer Table 3) 3,024,000
Merchandis

2.

To determine

value of inventory on March 31, 2016 and cost of merchandise sold using last in first out method under periodic inventory system.

3.

To determine

value of inventory on March 31, 2016 and cost of merchandise sold using weighted average method under periodic inventory system.

4.

To determine

To compare: The gross profit and inventories on March 31, 2016 of all the three methods.

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Ch-7 P-1DQCh-7 P-2DQCh-7 P-3DQCh-7 P-4DQCh-7 P-5DQCh-7 P-6DQCh-7 P-7DQCh-7 P-8DQCh-7 P-9DQCh-7 P-10DQ
Ch-7 P-7.1APECh-7 P-7.1BPECh-7 P-7.2APECh-7 P-7.2BPECh-7 P-7.3APECh-7 P-7.3BPECh-7 P-7.4APECh-7 P-7.4BPECh-7 P-7.5APECh-7 P-7.5BPECh-7 P-7.6APECh-7 P-7.6BPECh-7 P-7.7APECh-7 P-7.7BPECh-7 P-7.8APECh-7 P-7.8BPECh-7 P-7.1EXCh-7 P-7.2EXCh-7 P-7.3EXCh-7 P-7.4EXCh-7 P-7.5EXCh-7 P-7.6EXCh-7 P-7.7EXCh-7 P-7.8EXCh-7 P-7.9EXCh-7 P-7.10EXCh-7 P-7.11EXCh-7 P-7.12EXCh-7 P-7.13EXCh-7 P-7.14EXCh-7 P-7.15EXCh-7 P-7.16EXCh-7 P-7.17EXCh-7 P-7.18EXCh-7 P-7.19EXCh-7 P-7.20EXCh-7 P-7.21EXCh-7 P-7.22EXCh-7 P-7.23EXCh-7 P-7.24EXCh-7 P-7.25EXCh-7 P-7.26EXCh-7 P-7.27EXCh-7 P-7.28EXCh-7 P-7.1APRCh-7 P-7.2APRCh-7 P-7.3APRCh-7 P-7.4APRCh-7 P-7.5APRCh-7 P-7.6APRCh-7 P-7.7APRCh-7 P-7.1BPRCh-7 P-7.2BPRCh-7 P-7.3BPRCh-7 P-7.4BPRCh-7 P-7.5BPRCh-7 P-7.6BPRCh-7 P-7.7BPRCh-7 P-7.1CPCh-7 P-7.2CPCh-7 P-7.3CPCh-7 P-7.4CPCh-7 P-7.5CPCh-7 P-7.6CP

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