Question

To prepare solutions to the following requirements, use the data provided in P7, but assume that the company uses the perpetual inventory system.
In P7, The inventory of Product A and data on purchases and sales for a two-month period follow. The company closes its books at the end of each month. It uses the periodic inventory system.

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REQUIRED
1. Determine the cost of ending inventory and cost of goods sold for April and May using the average-cost method. Round unit costs to cents and totals to dollars.
2. Determine the cost of ending inventory and cost of goods sold for April and May using the FIFO method.
3. Determine the cost of ending inventory and cost of goods sold for April and May using the LIFO method.
4. Assume that this company grows for many years in a long period of rising prices. How realistic do you think the balance sheet value for inventory would be, and what effect would it have on the inventory turnover ratio?



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  • CreatedSeptember 10, 2014
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