Garrett Company has the following transactions during the months of April and May: Date Transaction Units Cost/Unit April 1 Balance 300 17 Purchase 200 $5.10 25 Sale 150 28 Purchase 100 5.80 May 5 Purchase 250 5.10 18 Sale 300 22 Sale 50 The cost of the inventory on April 1 is $5, $4, and $2 per unit, respectively, under the FIFO, average, and LIFO cost flow assumptions. Required: 1. Compute the inventories at the end of each month and the cost of goods sold for each month for the following alternatives: FIFO periodic Cost of Goods Sold Ending Inventory April $ ____________ $ ____________ May $ ____________ $ ____________ FIFO perpetual Cost of Goods Sold Ending Inventory April $ ____________ $ ____________ May $ ____________ $ ____________ LIFO periodic Cost of Goods Sold Ending Inventory April $ ____________ $ ____________ May $ ____________ $ ____________ LIFO perpetual (Round your intermediate calculations to the nearest cent.) Cost of Goods Sold Ending Inventory April $ ____________ $ ____________ May $ ____________ $ ____________ Weighted average (Round unit costs to 4 decimal places and final answers to the nearest dollar.) Cost of Goods Sold Ending Inventory April $ ____________ $ ____________ May $ ____________ $ ____________ Moving average (Round unit costs to 2 decimal places and final answers to nearest dollar.) Cost of Goods Sold Ending Inventory April $ ____________ $ ____________ May $ ____________ $ ____________ 2. Reconcile the difference between the LIFO periodic and the LIFO perpetual results. If an amount is zero, enter "0". April Cost of Goods Sold Ending Inventory Difference $ ____________ $ ____________ May Cost of Goods Sold Ending Inventory Difference $ ____________ $ ____________ 3. If Garrett uses IFRS, which of the previous alternatives would be acceptable, and why? If Garrett Company uses IFRS, it may report its inventory under . It may not use under IFRS because it is not consistent with any presumed physical flow of inventory. Also, is not allowed for tax purposes in most other countries, so there is no tax incentive for a company to use . Note that companies that use IFRS and have rising inventory costs will report a higher income because they include holding gains in income.

Garrett Company has the following transactions during the months of April and May: Date Transaction Units Cost/Unit April 1 Balance 300 17 Purchase 200 $5.10 25 Sale 150 28 Purchase 100 5.80 May 5 Purchase 250 5.10 18 Sale 300 22 Sale 50 The cost of the inventory on April 1 is $5, $4, and $2 per unit, respectively, under the FIFO, average, and LIFO cost flow assumptions. Required: 1. Compute the inventories at the end of each month and the cost of goods sold for each month for the following alternatives: FIFO periodic Cost of Goods Sold Ending Inventory April $ $ May $ $ FIFO perpetual Cost of Goods Sold Ending Inventory April $ $ May $ $ LIFO periodic Cost of Goods Sold Ending Inventory April $ $ May $ $ LIFO perpetual (Round your intermediate calculations to the nearest cent.) Cost of Goods Sold Ending Inventory April $ $ May $ $ Weighted average (Round unit costs to 4 decimal places and final answers to the nearest dollar.) Cost of Goods Sold Ending Inventory April $ $ May $ $ Moving average (Round unit costs to 2 decimal places and final answers to nearest dollar.) Cost of Goods Sold Ending Inventory April $ $ May $ $ 2. Reconcile the difference between the LIFO periodic and the LIFO perpetual results. If an amount is zero, enter "0". April Cost of Goods Sold Ending Inventory Difference $ $ May Cost of Goods Sold Ending Inventory Difference $ $ 3. If Garrett uses IFRS, which of the previous alternatives would be acceptable, and why? If Garrett Company uses IFRS, it may report its inventory under . It may not use under IFRS because it is not consistent with any presumed physical flow of inventory. Also, is not allowed for tax purposes in most other countries, so there is no tax incentive for a company to use . Note that companies that use IFRS and have rising inventory costs will report a higher income because they include holding gains in income.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter10: Inventory

Section: Chapter Questions

Problem 2PB: DeForest Company had the following transactions for the month. Calculate the ending inventory dollar...

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Garrett Company has the following transactions during the months of April and May:

Date	Transaction	Units	Cost/Unit

April 1	Balance	300
17	Purchase	200	$5.10
25	Sale	150
28	Purchase	100	5.80
May 5	Purchase	250	5.10
18	Sale	300
22	Sale	50

The cost of the inventory on April 1 is $5, $4, and $2 per unit, respectively, under the FIFO, average, and LIFO cost flow assumptions.

Required:

1. Compute the inventories at the end of each month and the cost of goods sold for each month for the following alternatives:

FIFO periodic

Cost of Goods Sold Ending Inventory

April $ ____________ $ ____________

May $ ____________ $ ____________
FIFO perpetual

Cost of Goods Sold Ending Inventory

April $ ____________ $ ____________

May $ ____________ $ ____________
LIFO periodic

Cost of Goods Sold Ending Inventory

April $ ____________ $ ____________

May $ ____________ $ ____________
LIFO perpetual (Round your intermediate calculations to the nearest cent.)

Cost of Goods Sold Ending Inventory

April $ ____________ $ ____________

May $ ____________ $ ____________
Weighted average (Round unit costs to 4 decimal places and final answers to the nearest dollar.)

Cost of Goods Sold Ending Inventory

April $ ____________ $ ____________

May $ ____________ $ ____________
Moving average (Round unit costs to 2 decimal places and final answers to nearest dollar.)

Cost of Goods Sold Ending Inventory

April $ ____________ $ ____________

May $ ____________ $ ____________

2. Reconcile the difference between the LIFO periodic and the LIFO perpetual results. If an amount is zero, enter "0".

April	Cost of Goods Sold	Ending Inventory
Difference	$ ____________	$ ____________
May	Cost of Goods Sold	Ending Inventory
Difference	$ ____________	$ ____________

3. If Garrett uses IFRS, which of the previous alternatives would be acceptable, and why?

If Garrett Company uses IFRS, it may report its inventory under . It may not use under IFRS because it is not consistent with any presumed physical flow of inventory. Also, is not allowed for tax purposes in most other countries, so there is no tax incentive for a company to use . Note that companies that use IFRS and have rising inventory costs will report a higher income because they include holding gains in income.

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