Cost flow assumptionsFIFO and LIFO using a periodic system Mower-Blower Sales Co. started business on January 20,
Question:
Cost flow assumptionsFIFO and LIFO using a periodic system Mower-Blower Sales Co. started business on January 20, 2013. Products sold were snow blowers and lawn mowers. Each product sold for $700. Purchases during 2013 were as follows:
The December 31, 2013, inventory included 10 blowers and 25 mowers. Assume the company uses a periodic inventory system.
Required: a. What will be the difference between ending inventory valuation at December 31, 2013, under the FIFO and LIFO cost flow assumptions? (Hint: Compute ending inventory under each method, and then compare results.) b. If the cost of mowers had increased to $480 each by December 1, and if management had purchased 30 mowers at that time, which cost flow assumption was probably being used by the firm? Explain youranswer.
Ending Inventory 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 =...
Transcribed Image Text:
Blowers 20 @ $400 40 390 30@ 380 20@ 380 Mowers January 21 February 3 February 28 March 13 April 6 May 22 June 3 June 20 August 15 September 20 November 7 20 @ $420 40@ 430 40 @ 440 60@ 460 20 430 20 @ 420 20@ 400
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a Ending inventory calculations FIFO LIFO Blowers 10 of 117 400 4000 10 of 121 400 4000 Mowers 20 of ...View the full answer
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