1.
Concept Introduction:
LIFO reserves: The amount of difference between the FIFO and LIFO cost of inventory for bookkeeping purposes, when conversion takes place from the FIFO to LIFO method is stated as LIFO reserve. Generally, the conversion from FIFO to LIFO takes place at the end of the accounting period. The difference between the internal method and the LIFO method is recorded to a contra account called LIFO reserves.
The
2.
Concept Introduction:
LIFO reserves: The amount of difference between the FIFO and LIFO cost of inventory for bookkeeping purposes, when conversion takes place from the FIFO to LIFO method is stated as LIFO reserve. Generally, the conversion from FIFO to LIFO takes place at the end of the accounting period. The difference between the internal method and the LIFO method is recorded to a contra account called LIFO reserves.
The cost of goods sold for the year ended when the FIFO method is applied to report inventory.
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INTERMEDIATE ACCOUNTING <CUSTOM LL>
- WMC uses a periodic inventory system and the FIFO cost method. Required: 1. Determine the effect of these errors on retained earnings at January 1, 2021, before any adjustments. (Ignore income taxes.) 2. Prepare a journal entry to correct the errors.arrow_forwardThe following information is available for Ayayai Corp. for 2023: Payment for goods during year Accounts Payable, beginning Inventory, beginning Accounts Payable, ending Inventory, ending Cost of goods sold for 2023 is $106100. $120600. $137700. $106300. $106200 14200 31500 14100 17000arrow_forwardLumen INC. is preparing its 2020 year-end financial statements. Prior to any adjustments, inventory is valued at P76,050, based on a physical count. The following information has been found relating to certain inventory transactions.2. Goods costing P2,700 were received from a vendor on January 5, 2021. The related invoice was received and recorded on January 5, 2021. The goods were shipped on December 31, 2020, terms FOB shipping point. Which of the following statements is true?a. There is no effect on the ending inventory.b. There is no effect on the net income.c. The 2020 ending inventory is overstated.d. The 2020 net income is overstated. Include an explanation.arrow_forward
- The following information was available for the year ended December 31, 2019: Net sales $821,250 Cost of goods sold Average accounts receivable for the year Accounts receivable at year-end Average inventory for the year Inventory at year-end 602, 250 39,100 30,400 166,000 157,575 Required: a. Calculate the inventory turnover for 2019. (Round your answer to 2 decimal places.) b. Calculate the number of days' sales in inventory for 2019, using year-end inventories. (Use 365 days a year. Round your answer to 1 decimal place.) c. Calculate the accounts receivable turnover for 2019. (Round your answer to 1 decimal place.) d. Calculate the number of days' sales in accounts receivable for 2019, using year-end accounts receivable. (Use 365 days a year. Round your answer to 1 decimal place.) a. Inventory turnover b. Number of days' sales in Inventory c. Accounts receivable turnover d. Number of days' sales in accounts receivable times days times daysarrow_forwardCompany ZT reported for the fiscal year ended 2020, a $51970 and $62400 beginning and ending accounts receivable, respectively. A $9750 beginning accounts payable and $16850 ending accounts payable was also reported. Likewise, an ending inventory of $28600 and a beginning inventory of $15400, with $371500 cost of goods sold was included in the report. Finally, the report reflects a credit sales of $1289300. Approximately, how many days does it take for Company ZT to turn its inventory to sales? Approximately, how many days does it take for Company ZT to collect a typical invoice? Approximately, how many days does it take for Company ZT to pay for its invoice?arrow_forwardREQUIRED:(a) Calculate the LCNRV using the “individual-item” approach.(b) Prepare the journal entries as at 31 December 2020 assuming that a loss method and the Allowance to Reduce Inventory to NRV Account is used to record the write down of the inventory.(c) Assume that as at 31 December 2020, the account of Allowance to Reduce Inventory to NRV had a credit balance of RM14,500. Determine the amount of the gain or loss that would be recorded due to the change in the Allowance to Reduce Inventory to NRV Account as in (b). Show the related journal entries.arrow_forward
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- At the end of the year, a company has to record an adjusting entry for the amount of sales made in the current year that it expects will be returned in the next year. Assuming the periodic inventory system is used, which of the following adjusting entries would record this estimate? a.Debit Sales Returns and Allowances and credit Merchandise Inventory b.Debit Income Summary and credit Estimated Returns Inventory c.Debit Estimated Returns Inventory and credit Cost of Goods Sold d.Debit Sales Returns and Allowances and credit Customer Refunds Payablearrow_forwardBest Company had the following transactions in March 2020: Purchased merchandising amounting to P36,000. Terms, March 2 2/10, n/30 FOB Shipping Point. Paid freight bill amounting to P4,000. Returned P3,000 of the merchandise purchase on March March 5 2 because they were defective Sold merchandise on account for P10,000, Terms 3/15, March 8 n/30. The cost of merchandise sold was P6,000 March 10 Paid the purchase made on March 2 Received P2,.000 of merchandise sold on March 8. The March 12 cost of the merchandise returned was P1.200. March 22 Received cash from the March 8 sale.arrow_forwardWhat amount should be presented as a deduction from cost of goods sold? IJUN Company sells five kinds of products and reports its inventory at Lower of Cost and Net Realizable Value. On December 31, 2021, IJUN reported an ihentory of P5,500,000 and an allowance for inventory write-down before any adjustment of P300,000. The following information is made available Product A P1,800,000 P1,650 000 P1,700,000 P1,500.000 P1.600,000 950,000 780.000 1,200,000 1275.000 1,500,000 1,350 000 1.175.000 1400 000 Product B Product C Product D Product E Sales Price Cost of Goods Sold Historical Cost 825.000 650.000 1.050 000 1.400.000 1.000 000 925.000 1 200,000 1325 000 700,000 1.050,000 1.200,000 900 000 Replacement Cost Net Realizable Value Your answerarrow_forward
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