During January, a companythat uses a perpetual inventory system had beginning inventory,purchases, and sales as follows:
Units Unit cost
Beggininginventory 100 10
Jan 5purchased 40 12
Jan 10sold 60
Jan 15purchased 70 13
Jan 25sold 50
** The selling priceper unit is $20.
2. Using theperiodic inventory system, calculatethe cost of goods sold for January and cost of the company'sJanuary 31st inventory for the followingmethods. Show all your work using theformat provided in the appendix of the chapter in thetext!
a) FIFO
b) LIFO
c) Weighted average
3. A company made thefollowing purchases during the year:
Jan 10: 15 units @ 360each
Mar 25: 25 units @390each
April 25: 10 units @ 420each
July 30: 20 units @ 450each
Oct 10: 15 units @ 480each
On December 31, there were28 units in ending inventory. These 28 units consisted of 1 fromthe January 10 purchase, 2 from the March 15 purchase, 5 from theApril 25 purchase, 15 from the July 30 purchase, and 5 from theOctober 10 purchase. Using perpetual inventory system, calculatethe cost goods sold and ending inventory for the year using thespecific identification method. Show all your work using the format provided in the text!(Note: Answers do not differ using the periodic inventorysystem)
4. Monitor Company usesthe LIFO method for valuing its ending inventory. The followingfinancial statement information is available for its first year ofoperation:
Income Statement
For the year ended Dec31
Sales 50,0000
Cost of goodssold 23,000
Grossprofit 27,000
Expenses 13,000
Income beforetaxes 14,000
Monitor's ending inventoryusing the LIFO method was $8,200. Monitor's accountant determinedthat, had the company used FIFO, the ending inventory would havebeen $8,500.
a) Determine what the income before taxeswould have been, had Monitor used the FIFO method of inventoryvaluation instead of LIFO.
b) Whatwould be the difference in income taxes between LIFO and FIFO,assuming a 30% tax rate?
c) IfMonitor wanted to lower the amount ofincome taxes to be paid, which method would itchoose?
During January, a companythat uses a perpetual inventory system had beginning inventory,purchases, and sales as follows:
Units Unit cost
Beggininginventory 100 10
Jan 5purchased 40 12
Jan 10sold 60
Jan 15purchased 70 13
Jan 25sold 50
** The selling priceper unit is $20.
2. Using theperiodic inventory system, calculatethe cost of goods sold for January and cost of the company'sJanuary 31st inventory for the followingmethods. Show all your work using theformat provided in the appendix of the chapter in thetext!
a) FIFO
b) LIFO
c) Weighted average
3. A company made thefollowing purchases during the year:
Jan 10: 15 units @ 360each
Mar 25: 25 units @390each
April 25: 10 units @ 420each
July 30: 20 units @ 450each
Oct 10: 15 units @ 480each
On December 31, there were28 units in ending inventory. These 28 units consisted of 1 fromthe January 10 purchase, 2 from the March 15 purchase, 5 from theApril 25 purchase, 15 from the July 30 purchase, and 5 from theOctober 10 purchase. Using perpetual inventory system, calculatethe cost goods sold and ending inventory for the year using thespecific identification method. Show all your work using the format provided in the text!(Note: Answers do not differ using the periodic inventorysystem)
4. Monitor Company usesthe LIFO method for valuing its ending inventory. The followingfinancial statement information is available for its first year ofoperation:
Income Statement
For the year ended Dec31
Sales 50,0000
Cost of goodssold 23,000
Grossprofit 27,000
Expenses 13,000
Income beforetaxes 14,000
Monitor's ending inventoryusing the LIFO method was $8,200. Monitor's accountant determinedthat, had the company used FIFO, the ending inventory would havebeen $8,500.
a) Determine what the income before taxeswould have been, had Monitor used the FIFO method of inventoryvaluation instead of LIFO.
b) Whatwould be the difference in income taxes between LIFO and FIFO,assuming a 30% tax rate?
c) IfMonitor wanted to lower the amount ofincome taxes to be paid, which method would itchoose?
Related questions
Use the following information for the Exercisesbelow.
[The following information applies to the questionsdisplayed below.]
Laker Company reported the following January purchases and salesdata for its only product.
Date | Activities | Units Acquired at Cost | Units sold at Retail | ||||||||||||||
Jan. | 1 | Beginning inventory | 140 | units | @ | $ | 6.00 | = | $ | 840 | |||||||
Jan. | 10 | Sales | 100 | units | @ | $ | 15 | ||||||||||
Jan. | 20 | Purchase | 60 | units | @ | $ | 5.00 | = | 300 | ||||||||
Jan. | 25 | Sales | 80 | units | @ | $ | 15 | ||||||||||
Jan. | 30 | Purchase | 180 | units | @ | $ | 4.50 | = | 810 | ||||||||
Totals | 380 | units | $ | 1,950 | 180 | units | |||||||||||
The Company uses a perpetual inventory system. For specificidentification, ending inventory consists of 200 units, where 180are from the January 30 purchase, 5 are from the January 20purchase, and 15 are from beginning inventory.
Exercise 6-3 Perpetual: Inventory costing methods LO P1
Required:
1. Complete the table to determine the costassigned to ending inventory and cost of goods sold using specificidentification.
2. Determine the cost assigned to ending inventoryand to cost of goods sold using weighted average.
3. Determine the cost assigned to ending inventoryand to cost of goods sold using FIFO.
4. Determine the cost assigned to ending inventoryand to cost of goods sold using LIFO.
Required 3
Required 4
Complete the table to determine the cost assigned to endinginventory and cost of goods sold using specific identification.
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Determine the cost assigned to ending inventory and to cost ofgoods sold using weighted average. (Round cost per unit to 2decimal places.)
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Determine the cost assigned to ending inventory and to cost ofgoods sold using FIFO.
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Determine the cost assigned to ending inventory and to cost ofgoods sold using LIFO.
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