Periodic Inventory by Three Methods The units of an item available for sale during the year were
Question:
Periodic Inventory by Three Methods
The units of an item available for sale during the year were as follows:
Jan. 1 | Inventory | 5 units @ $33 |
Feb. 17 | Purchase | 18 units @ $34 |
July 21 | Purchase | 10 units @ $37 |
Nov. 23 | Purchase | 15 units @ $38 |
There are 5 units of the item in the physical inventory at December 31. The periodic inventory system is used.
a. Determine the inventory cost by the first-in, first-out method.
b. Determine the inventory cost by the last-in, first-out method.
c. Determine the inventory cost by the weighted average cost method. Round average unit cost to the nearest cent and final answers to the nearest whole dollar, if required. 2. Periodic Inventory by Three Methods; Cost of Merchandise Sold
The units of an item available for sale during the year were as follows:
Jan. 1 | Inventory | 50 units @ $94 |
Mar. 10 | Purchase | 60 units @ $104 |
Aug. 30 | Purchase | 20 units @ $108 |
Dec. 12 | Purchase | 70 units @ $112 |
There are 80 units of the item in the physical inventory at December 31. The periodic inventory system is used.
Determine the inventory cost and the cost of merchandise sold by three methods. Round interim calculations to one decimal and final answers to the nearest whole dollar.
Inventory Method | Merchandise Inventory | Merchandise Sold |
a. First-in, first-out (FIFO) | $fill in the blank 1 | $fill in the blank 2 |
b. Last-in, first-out (LIFO) | fill in the blank 3 | fill in the blank 4 |
c. Weighted average cost | fill in the blank 5 | fill in the blank 6 |
3.Comparing Inventory Methods
Assume that a firm separately determined inventory under FIFO and LIFOand then compared the results.
a. In each dropdown that follows, select the correct sign [less than (<), greater than (>), or equal (=)] for each comparison, assuming periods of rising prices.
1. FIFO inventory | <>= | LIFO inventory |
2. FIFO cost of merchandise sold | <>= | LIFO cost of merchandise sold |
3. FIFO net income | <>= | LIFO net income |
4. FIFO income taxes | <>= | LIFO income taxes |
b. Why would management prefer to use LIFO over FIFO in periods of rising prices?
Corporate Financial Accounting
ISBN: 978-1133952411
12th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan E. Duchac