Question

The following series of transactions occurred during 2009:
January 1 Beginning inventory was 70 units at $10 each
January 15 Purchased 100 units at $11 each
February 4 Sold 60 units at $20 each
March 10 Purchased 50 units at $12 each
April 15 Sold 70 units at $20 each
June 30 Purchased 100 units at $13 each
August 4 Sold 110 units at $20 each
October 1 Purchased 80 units at $14 each
December 5 Sold 50 units at $21 each
August 15 Sold 25 units at $150 each
November 28 Purchased 30 units at $110 each

Requirements
1. Calculate the value of the ending inventory and cost of goods sold, assuming the company uses a periodic inventory system and the FIFO cost flow assumption.
2. Calculate the value of the ending inventory and cost of goods sold, assuming the company uses a periodic inventory system and the LIFO cost flow assumption.
3. Calculate the value of the ending inventory and cost of goods sold, assuming the company uses a periodic record-keeping system and the weighted average cost flow assumption.
4. Which of the three methods will result in the highest cost of goods sold for the year ended December 31, 2009?
5. Which of the three methods will provide the most current ending inventory value for the balance sheet at December 31, 2009?
6. How will the differences between the methods affect the income statement for the year and the balance sheet at year end?
7. Calculate the company’s inventory turnover ratio and average days in inventory for the year for each method in items 1, 2, and 3.
8. At the end of the year, the current replacement cost of the inventory is $1,100. Indicate at what amount the company’s inventory will be reported using the lower-of-cost-or-market rule for each method (FIFO, LIFO, and weighted average cost).



$1.99
Sales0
Views88
Comments0
  • CreatedSeptember 01, 2014
  • Files Included
Post your question
5000