MGMT 1A Lecture Notes - Lecture 13: Purch Group, Income Statement, Financial Statement
Document Summary
Mgmt 1a lecture 13 notes - perpetual inventory. 120 units - 60 + 50 = 110. Fifo is a better method if prices are increasing because gross profit looks much higher. Inventory (fifo basis) = inventory (lifo basis) + lifo reserve. Change in lifo reserve = lifo reserve (current year) - lifo reserve (prior year) Cogs (fifo basis) = cogs (lifo basis) - change in lifo reserve i. ii. i. ii. Footnote: the lifo reserve in 20x2 = , in 20x1 it was . Inventory (fifo basis) = 110 + 90 = 200. Cogs (fifo basis) = 430 - 20 (change in lifo reserve, 90-70) = 410. Every year we must take a physical count of inventory. Sales = , gross profit = 30% of sales. Coga = 900: determine cogs, sales - cogs = gross profit, sales = 1000, cogs (700, gross profit = 300 1000 *0. 3 = 300, beg inv. 100, +net purch , coga = 900.
