Aldor Corporation opened a new store on January 1, 2014. During 2014, the fi rst year of
Question:
Aldor Corporation opened a new store on January 1, 2014. During 2014, the fi rst year of operations, the following purchases and sales of inventory were made:
Instructions
(a) Calculate the cost of goods available for sale and the number of units of ending inventory.
(b) Assume Aldor uses average periodic. Calculate the cost of ending inventory, cost of the goods sold, and gross profit.
(c) Assume Aldor uses average perpetual. Calculate the cost of ending inventory, cost of the goods sold, and gross profit.
(d) Prepare journal entries to record the December 20 purchase and the December 29 sale using (1) average periodic and (2) average perpetual.
(e) Compare the results of (b) and (c) above and comment.
Taking It Further
If a company uses the average cost determination method, are there any benefits to using average perpetual over average periodic? Explain.
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
Accounting Principles Part 1
ISBN: 978-1118306789
6th Canadian edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Kinnear, Joan E. Barlow