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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: 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: 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 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.

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Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 7, Problem 7.5BPR
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:

Chapter 7, Problem 7.5BPR, Periodic inventory by three methods Pappas Appliances uses the periodic inventory system. Details

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:

  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 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.

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Chapter 7 Solutions

Accounting
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