Glenmount Inc. is trying to determine whether to use the FIFO or average cost method. The accounting
Question:
Glenmount Inc. is trying to determine whether to use the FIFO or average cost method. The accounting records show the following selected inventory information:
The company accountant has prepared the following partial income statement to help management understand the financial statement impact of each cost determination method.
Instructions
(a) Complete the perpetual inventory schedule shown above, assuming the use of the FIFO cost method.
(b) Complete the perpetual inventory schedule shown above, assuming the use of the average cost method. (Use unrounded numbers in your calculations but round to the nearest cent for presentation purposes in your answer.)
(c) Fill in the missing information in the blanks shown in the income statements above.
(d) Explain whether the comparative profits of each cost method determined in part (c) will be expected to increase, decrease, or not change if
(1) Costs fall, and
(2) Costs remain stable.
Step by Step Answer:
Financial Accounting Tools for Business Decision Making
ISBN: 978-1118644942
6th Canadian edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine