Supplemental LIFO disclosures; LIFO reserve; AEP Industries
• LO8–6
Real World Financials
AEP Industries Inc. is a leading manufacturer of plastic packing films. The company uses the LIFO inventory method for external reporting but maintains its internal records using FIFO. The following disclosure note was included in a recent quarterly report:
4. Inventories (in part)
Inventories are comprised of the following ($ in thousands):
January 31, 2016 | October 31, 2015 | |
Raw materials | $ 42,881 | $ 47,593 |
Finished goods | 71,547 | 66,484 |
Supplies | 5,240 | 5,280 |
119,668 | 119,357 | |
Less: LIFO reserve | (13,655) | (18,093) |
Inventories (under LIFO) | $106,013 | $101,264 |
The company’s income statements reported cost of goods sold of $209,826 thousand for the quarter ended January 31, 2016.
Required:
1. Assume that AEP adjusts the LIFO reserve at the end of its quarter. Prepare the January 31, 2016,
2. If AEP had used FIFO to value its inventories, what would cost of goods sold have been for the quarter ended January 31, 2016?
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Chapter 8 Solutions
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- PROBLEM 17 On January 15, 2020, a strong monsoon hit the country and destroyed all the inventory of Aeirron Company stored in the warehouse. The following information is available from the records of the company's periodic inventory system: ww Beginning inventory Purchases, January1 to January 15, 2020 Sales, January 1 to January 15, 2020 P1,000.000 500,000 800,000 The following are the past performance of Aeirron Company: 2019 2018 Sales P4,500,000 P4,100,000 Cost of Sales 2,300,000 2,500,000 Requirements: 1. Compute the gross profit rate of the company for the pastyears. 2. Compute the inventory lost in monsoon.arrow_forwardQS 13-12 (Algo) Computing inventory turnover and days' sales in inventory LO P3 SCC Company reported the following for the current year: Net sales $ 52,000 Cost of goods sold Beginning balance in inventory Ending balance in inventory 45,900 2,400 8,400 Compute (a) inventory turnover and (b) days' sales in inventory. Hint. Inventory turnover uses average inventory and days' sales in inventory uses the ending balance in inventory. Complete this question by entering your answers in the tabs below. Days Sales In Inventory Inventory Turnover Compute the inventory turnover. Inventory Turnover Numerator: Denominator: Inventory Turnover Inventory turnover %3D times %3Darrow_forwardOMANTEL El GOD O©41% 9:12 18 Muscat Company uses the periodic inventory system to account for inventories. Information related to Muscat Company's inventory for the month of January 2020 is given as follows: Units Per unit price Total Balance, 1/1/20 200 OMR 5.00 Purchase, 1/15/2020 100 5.30 Purchase, 1/28/2020 100 5.50 The physical inventory count on January 31 shows 120 units are on hand. Using the FIFO method, what is the cost of goods sold? IIarrow_forward
- 26 ces Required information [The following information applies to the questions displayed below] Simon Company's year-end balance sheets follow. At December 31 Assets Cash Accounts receivable, net Merchandise inventory. Prepaid expenses Plant assets, net Total assets Current Year $ 30,401 92,653 113,068 9,790 285,290 $ 531,208 1 Year Ago $ 37,001 66,035 85,566 9,809 259,527 $457,938 $ 133,593 97,870 162,500 137,245 $ 531,200 Liabilities and Equity Accounts payable Long-term notes payable Common stock, $10 par value Retained earnings Total liabilities and equity For both the current year and one year ago, compute the following ratios: 2 Years Ago $ 37,413 48,906 53,137 3,994 227,050 $370,500 $ 76,618 104,272 163,500 113,548 $ 457,938 $ 49,884 81,062 161,500 76,054 $ 370,500 1. Express the balance sheets in common-size percents. 2. Assuming annual sales have not changed in the last three years, is the change in accounts receivable as a percentage of total assets favorable or unfavorable?…arrow_forwardExercise 8-14 (Algo) Inventory cost flow methods; perpetual system [LO8-1, 8-4] [The following information applies to the questions displayed below.] Altira Corporation provides the following information related to its inventory during the month of August 2024: August 1 Inventory on hand-2,900 units; cost $7.00 each. August 8 Purchased 14,500 units for $6.40 each. Sold 11,600 units for Purchased 8,700 units August 14 $12.90 each. August 18 for $6.00 each. August 25 Sold 10,600 units for $11.90 each. August 28 Purchased 4,900 units for $5.80 each. August 31 Inventory on hand-8,800 units. Exercise 8-14 (Algo) Part 1 Required: 1. Using calculations based on a perpetual inventory system, determine the inventory balance Altira would report in its August 31, 2024, balance sheet and the cost of goods sold it would report in its August 2024 income statement using the FIFO method. Perpetual FIFO: Beginning Inventory Purchases: August 8 August 18 August 28 Total Cost of Goods Available for Sale…arrow_forward7-52 Chapter 7 Inventories: Cost Measurement and Flow Assumptions P7-13 Dollar-Value LIFO Kwestel Company adopted the dollar-value LIFO method for inventory valuation at the be- ginning of 2015. The following information about the inventory at the end of cach year is available from Kwestel's records: LO 7.7 Year Current Cost Index $ 8,000 10,800 11,500 14,000 10,500 2014 100 120 2015 2016 130 145 2017 2018 125 Required: Calculate the dollar-value LIFO inventory at the end of each year. Round to the nearest dollar.arrow_forward
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