ACCT207 Chapter Notes - Chapter 6-12: Inventory Turnover, Asset, Asset Turnover

58 views14 pages

purplefox280

14 Dec 2016

School

University of Delaware

Department

Accounting

Course

ACCT207

Professor

Langdon Geoff

For unlimited access to Textbook Notes, a Class+ subscription is required.

Document Summary

Cost flow assumptions- assumptions about which units were sold: fifo-first in first out, lifo-last in first out, average cost. There is no accounting requirement that the cost flow assumption be consistent with the physical movement of goods (beginning inventory + purchases) ending inventory = cost of goods sold. No matter which cost flow assumption we use, the sum of cost of goods sold + ending inventory must equal the cost of goods available for sale. Fifo: earliest goods purchased = first goods to be recognized sold, the cost of earliest goods purchased are the first to be recognized in determining cost of goods sold regardless of which units were actually sold. Compute ending inventory cost of goods sold cost of goods available for sale: cost of goods available for sale = beginning inventory + In periods of inflation fifo produces a higher net income because lower unit costs of the first units purchased are matched against revenue.

Related Questions

In its first month of operations, Literacy for the Illiterate opened a new bookstore and bought merchandise in the following order: (1) 420 units at $9 on January 1, (2) 600 units at $10 on January 8, and (3) 900 units at $11 on January 29.

Assume 1,120 units are on hand at the end of the month, calculate the cost of goods available for sale, ending inventory, and cost of goods sold under the (a) FIFO, (b) LIFO, and (c) weighted average cost flow assumptions. Assume a periodic inventory system is used. (Round "Cost per Unit" to 2 decimal places.)

	FIFO	LIFO	Weighted Average Cost
Cost of Goods Available for Sale	$19,680	$19,680	$19,680
Ending Inventory
Cost of Goods Sold

blushdolphin201

21. Altira Corporation uses a periodic inventory system. Thefollowing information related to its merchandise inventory duringthe month of August 2016 is available:


Aug.1	Inventory onhandâ2,000 units; cost $6.10 each.
8	Purchased 10,000units for $5.50 each.
14	Sold 8,000 units for$12.00 each.
18	Purchased 6,000units for $5.00 each.
25	Sold 7,000 units for$11.00 each.
31	Inventory onhandâ3,000 units.

Required:

Determine the inventory balance Altira would report in itsAugust 31, 2016, balance sheet and the cost of goods sold it wouldreport in its August 2016 income statement using each of thefollowing cost flow methods: (Round "Average Cost per Unit"to 2 decimal places.)

FIFO	Cost of Goods Available for Sale			Cost of Goods Sold - Periodic FIFO			Ending Inventory - Periodic FIFO
FIFO	# of units	Cost per unit	Cost of Goods Available for Sale	# of units sold	Cost perunit	Cost of Goods Sold	# of units in ending inventory	Cost per unit	Ending Inventory
BeginningInventory	2,000	$6.10	$12,200	2,000	$6.10	$12,200		$6.10	$0
Purchases:
August 8	10,000	$5.50	55,000		$5.50			$5.50	0
August 18	6,000	$5.00	30,000	3,000	$5.00	15,000		$5.00
Total	18,000		$97,200	5,000		$27,200	0		$0

AverageCost	Cost ofGoods Available for Sale			Cost ofGoods Sold - Average Cost			EndingInventory - Average Cost
AverageCost	# of units	Average Cost per unit	Cost of Goods Available for Sale	# of units sold	Average Cost per Unit	Cost of Goods Sold	# of units in ending inventory	Average Cost per unit	Ending Inventory
Beginning Inventory
Purchases:
August 8
August 18
Total	0		$0			$0			$0

LIFO	Cost of Goods Available for Sale			Cost of Goods Sold - Periodic LIFO			Ending Inventory - Periodic LIFO
LIFO	# ofunits	Cost perunit	Cost ofGoods Available for Sale	# of unitssold	Cost perunit	Cost ofGoods Sold	# of unitsin ending inventory	Cost perunit	EndingInventory
Beginning Inventory	2,000	$6.10	$12,200		$6.10	$0		$6.10
Purchases:
August 8	10,000	$5.50	55,000		$5.50			$5.50
August 18	6,000	$5.00	30,000		$5.00			$5.00	0
Total	18,000		$97,200	0		$0	0		$0

erinsalmon861

Altira Corporation uses a periodic inventory system. Thefollowing information related to its merchandise inventory duringthe month of August 2018 is available:


Aug.1	Inventory on handâ2,000 units;cost $6.10 each.
8	Purchased 10,000 units for $5.50each.
14	Sold 8,000 units for $12.00each.
18	Purchased 6,000 units for $5.00each.
25	Sold 7,000 units for $11.00each.
31	Inventory on handâ3,000 units

Determine the inventory balance Altira would report in itsAugust 31, 2018, balance sheet and the cost of goods sold it wouldreport in its August 2018 income statement using each of thefollowing cost flow methods.

FIFO

LIFO

Average Cost

Determine the inventory balance Altira would report in itsAugust 31, 2018, balance sheet and the cost of goods sold it wouldreport in its August 2018 income statement using the FIFO method.(Round "Cost per Unit" to 2 decimal places.)

FIFO	Cost of Goods Available for Sale			Cost of Goods Sold - Periodic FIFO			Ending Inventory - Periodic FIFO
FIFO	# of units	Cost per unit	Cost of Goods Available for Sale	# of units sold	Cost perunit	Cost of Goods Sold	# of units in ending inventory	Cost per unit	Ending Inventory
BeginningInventory	2,000	$6.10	$12,200	2,000	$6.10	$12,200		$6.10	$0
Purchases:
August 8	10,000	$5.50	55,000	10,000	$5.50	55,000		$5.50	0
August 18	6,000	$5.00	30,000	3,000	$5.00	15,000		$5.00
Total	18,000		$97,200	15,000		$82,200	0		$0

Determine the inventory balance Altira would report in itsAugust 31, 2018, balance sheet and the cost of goods sold it wouldreport in its August 2018 income statement using LIFO method.(Round "Cost per Unit" to 2 decimal places.)

LIFO	Cost of Goods Available for Sale			Cost of Goods Sold - Periodic LIFO			Ending Inventory - Periodic LIFO
LIFO	# ofunits	Cost perunit	Cost ofGoods Available for Sale	# of unitssold	Cost perunit	Cost ofGoods Sold	# of unitsin ending inventory	Cost perunit	EndingInventory
Beginning Inventory	2,000	$6.10	$12,200		$6.10	$0		$6.10
Purchases:
August 8					$0.00			$0.00
August 18					$0.00			$0.00	0
Total	2,000		$12,200	0		$0	0		$0

Determine the inventory balance Altira would report in itsAugust 31, 2018, balance sheet and the cost of goods sold it wouldreport in its August 2018 income statement using Average costmethod. (Round "Average Cost per Unit" to 2 decimal places.)

AverageCost	Cost ofGoods Available for Sale			Cost ofGoods Sold - Average Cost			EndingInventory - Average Cost
AverageCost	# of units	Unit Cost	Cost of Goods Available for Sale	# of units sold	Average Cost per Unit	Cost of Goods Sold	# of units in ending inventory	Average Cost per unit	Ending Inventory
Beginning Inventory
Purchases:
August 8
August 18
Total	0		$0			$0			$0

peachcod466

ACCT207 Chapter Notes - Chapter 6-12: Inventory Turnover, Asset, Asset Turnover

Document Summary

Get access

Related Documents

ACCT207 Chapter Notes - Chapter 6: Inventory Turnover, Weighted Arithmetic Mean

ACCT207 Study Guide - Quiz Guide: Consignor, Consignee

ACCT207 Lecture Notes - Lecture 6: Shoplifting, Current Asset, Financial Statement

Related Questions