Perpetual and Periodic inventory valuation methods are discussed in this presentation. The systems are explained using the different valuations methods (FIFO, LIFO and AVG).
1. True or false. Unlike a merchandising business, a manufacturingAbbyWhyte974
1. True or false. Unlike a merchandising business, a manufacturing business uses multiple inventory accounts to reflect the cost of raw materials, partially completed goods, and finished goods.
TRUE
FALSE
2.5 points
QUESTION 2
1. For a manufacturing business, the finished goods inventory account reflects the cost of what?
Shipping
Partially completed goods
Completed goods
Raw materials
2.5 points
QUESTION 3
1. Super Goods, an electronics retailer, purchases $80,000 worth of computers from a manufacturer in Taiwan. The terms of the purchase are FOB shipping point. Freight costs total $9,000. The goods are shipped on June 1 and delivered on June 15. On June 1, which two accounts should be debited by Super Goods in the following journal entry? Date Account Dr. Cr. 6-01-XX 80000.00 9000.00 Accounts Payable 89000.00
Inventory and Freight-out
Accounts Receivable and Freight-out
Inventory and Freight-in
Accounts Receivable and Freight-in
2.5 points
QUESTION 4
1. At the time of shipment, goods that are purchased FOB shipping point are
reported on the seller's balance sheet.
considered the responsibility of the buyer.
designated as freight-out.
categorized as partially completed inventory.
2.5 points
QUESTION 5
1. On February 15, a buyer purchases $30,000 worth of goods from a manufacturer. The manufacturer offers the buyer a 3% discount ($900) if payment for the goods is made within 10 days. The buyer pays for the merchandise on February 20. In a journal entry, the seller should debit ________ and credit ________ for $900.
Sales; Purchase Discounts
Accounts Receivable; Sales
Sales; Accounts Receivable
Accounts Payable; Inventory
2.5 points
QUESTION 6
1. A buyer receives a sales discount from a seller for paying for purchased goods within a specific period of time. In what way does the sales discount affects the buyer?
Reducing freight-in costs
Reducing the cost of inventory
Increasing freight-out costs
Increasing the cost of inventory
2.5 points
QUESTION 7
1. For a manufacturing business, the __________ inventory account reflects the cost of products that have been manufactured and are ready to be sold.
Raw materials
Work-in-process
Freight-in
Finished goods
2.5 points
QUESTION 8
1. Which term refers to goods that a merchandising business purchases and resells?
Inputs
Frieght
Supplies
Inventory
2.5 points
QUESTION 9
1. On February 15, a buyer purchases $10,000 worth of goods from a manufacturer, who spent $5,000 to manufacture the goods. The terms of sale are FOB shipping point, and shipping costs are $800. The goods will be shipped on June 1. The manufacturer must make two journal entries on June 1. In the second journal entry, the manufacturer should debit ________ and credit ________. Date Account Dr. Cr. 6-01-XX Accounts Receivable 10,000.00 Cash 800.00 Sales 10,000.00 Date Account Dr. Cr. 6-01-XX 5,000.00 5,000.00
Cash; Cost of Goods Sold
Cost of Goods Sold; ...
1. True or false. Unlike a merchandising business, a manufacturingSantosConleyha
1. True or false. Unlike a merchandising business, a manufacturing business uses multiple inventory accounts to reflect the cost of raw materials, partially completed goods, and finished goods.
TRUE
FALSE
2.5 points
QUESTION 2
1. For a manufacturing business, the finished goods inventory account reflects the cost of what?
Shipping
Partially completed goods
Completed goods
Raw materials
2.5 points
QUESTION 3
1. Super Goods, an electronics retailer, purchases $80,000 worth of computers from a manufacturer in Taiwan. The terms of the purchase are FOB shipping point. Freight costs total $9,000. The goods are shipped on June 1 and delivered on June 15. On June 1, which two accounts should be debited by Super Goods in the following journal entry? Date Account Dr. Cr. 6-01-XX 80000.00 9000.00 Accounts Payable 89000.00
Inventory and Freight-out
Accounts Receivable and Freight-out
Inventory and Freight-in
Accounts Receivable and Freight-in
2.5 points
QUESTION 4
1. At the time of shipment, goods that are purchased FOB shipping point are
reported on the seller's balance sheet.
considered the responsibility of the buyer.
designated as freight-out.
categorized as partially completed inventory.
2.5 points
QUESTION 5
1. On February 15, a buyer purchases $30,000 worth of goods from a manufacturer. The manufacturer offers the buyer a 3% discount ($900) if payment for the goods is made within 10 days. The buyer pays for the merchandise on February 20. In a journal entry, the seller should debit ________ and credit ________ for $900.
Sales; Purchase Discounts
Accounts Receivable; Sales
Sales; Accounts Receivable
Accounts Payable; Inventory
2.5 points
QUESTION 6
1. A buyer receives a sales discount from a seller for paying for purchased goods within a specific period of time. In what way does the sales discount affects the buyer?
Reducing freight-in costs
Reducing the cost of inventory
Increasing freight-out costs
Increasing the cost of inventory
2.5 points
QUESTION 7
1. For a manufacturing business, the __________ inventory account reflects the cost of products that have been manufactured and are ready to be sold.
Raw materials
Work-in-process
Freight-in
Finished goods
2.5 points
QUESTION 8
1. Which term refers to goods that a merchandising business purchases and resells?
Inputs
Frieght
Supplies
Inventory
2.5 points
QUESTION 9
1. On February 15, a buyer purchases $10,000 worth of goods from a manufacturer, who spent $5,000 to manufacture the goods. The terms of sale are FOB shipping point, and shipping costs are $800. The goods will be shipped on June 1. The manufacturer must make two journal entries on June 1. In the second journal entry, the manufacturer should debit ________ and credit ________. Date Account Dr. Cr. 6-01-XX Accounts Receivable 10,000.00 Cash 800.00 Sales 10,000.00 Date Account Dr. Cr. 6-01-XX 5,000.00 5,000.00
Cash; Cost of Goods Sold
Cost of Goods Sold; ...
1 The ending merchandise inventory for 2007 is the same as the be.docxdorishigh
1: The ending merchandise inventory for 2007 is the same as the beginning merchandise inventory for 2008.
True
False
2: If merchandise costing 2,500 dollars, terms FOB destination, 2/10, n/30, with prepaid transportation costs of 100 dollars, is paid within 10 days, the amount of the purchases discount is 50 dollars.
Also an example in the lecture notes. 2500 x .02 = $50.
True
False
3: Under the periodic inventory system, the merchandise inventory account continuously discloses the amount of inventory on hand.
True
False
4: From PR 6-5B, which of the following journal entries is correct for April 3?
a. (Debit) Merchandise Inventory 25,200 dollars
(Credit) Accounts Payable—Prescott Co. 25,200 dollars
b. (Debit) Merchandise Inventory 42,200 dollars
(Credit) Accounts Payable—Prescott Co.$42,200 dollars
c. (Debit) Merchandise Inventory 25,000 dollars
(Credit) Accounts Payable—Prescott Co. 25,000 dollars
d. (Debit) Merchandise Inventory 42,000 dollars
(Credit) Accounts Payable—Prescott Co. 42,000 dollars
5: From PR 6-5B, which of the following journal entries is correct for April 24?
a. (Debit) Accounts Receivable—Alma Co.8,200 dollars
(Credit) Sales 8,200 dollars
b. (Debit) Accounts Receivable—Alma Co.9,200 dollars
(Credit) Sales 9,200 dollars
c. (Debit) Accounts Receivable—Alma Co.10,200 dollars
(Credit) Sales 10,200 dollars
d. (Debit) Sales 9,200 dollars
(Credit) Accounts Receivable—Alma Co.9,200 dollars
6: From EX 7-7, the total cost of ending inventory according to (a) FIFO is:
a. 19,000 dollars
b. 19,100 dollars
c. 19,200 dollars
d. 19,300 dollars
7: From EX 7-8, the inventory cost by (b) the LIFO method is:
a. 6,515 dollars
b. 6,313 dollars
c. 6,715 dollars
d. 6,414 dollars
8: From EX 7-8, the inventory cost by (C) the Average Cost method is:
a. 7,250 dollars
b. 7,350 dollars
c. 7,360 dollars
d. 7,390 dollars
9: Appendix EX 7-19, the April 30 cost of merchandise inventory is:
a. 161,000 dollars
b. 163,000 dollars
c. 165,000 dollars
d. 167,000 dollars
10: Appendix EX 7-21, estimated ending merchandise inventory is:
a. 270,000 dollars
b. 271,000 dollars
c. 272,000 dollars
d. 273,000 dollars
2.
(No template needed)
a.
b.
3.
(No template needed)
a.
b.
c.
4.
Merchandise available for sale
Less cost of merchandise sold
Estimated ending merchandise inventory $
5.
Cost
Retail
Merchandise inventory, April 1
$ 180,000
$ 300,000
Purchases in April (net)
1,200,000
2,000,000
Merchandise available for sale
Ratio of cost to retail price:
=
Sales for September (net)
Merchandise inventory, April 30, at retail
Multiply by ratio of cost to retail price:
x
Merchandise inventory, April 30, at estimated cost
The following were selected from among the transactions completed by Calworks Company during April of ...
1.Kingbird, Inc. took a physical inventory on December 31 and deteTatianaMajor22
1.Kingbird, Inc. took a physical inventory on December 31 and determined that goods costing $230,000 were on hand. Not included in the physical count were $31,000 of goods purchased from Blue Spruce Corp., FOB, shipping point, and $20,500 of goods sold to Blossom Company for $30,000, FOB destination. Both the Blue Spruce purchase and the Blossom sale were in transit at year-end.
What amount should Kingbird report as its December 31 inventory?
Ending Inventory
2. In its first month of operations, Sheridan Company made three purchases of merchandise in the following sequence: (1) 240 units at $3, (2) 340 units at $5, and (3) 440 units at $6. Assuming there are 140 units on hand at the end of the period, compute the cost of the ending inventory under (a) the FIFO method and (b) the LIFO method. Sheridan Company uses a periodic inventory system.
FIFO
LIFO
The Ending Inventory
$Enter a dollar amount
$Enter a dollar amount
3. The Blue Spruce Company has just completed a physical inventory count at year end, December 31, 2022. Only the items on the shelves, in storage, and in the receiving area were counted and costed on the FIFO basis. The inventory amounted to $ 77,300. During the audit, the independent CPA discovered the following additional information:
(a)
There were goods in transit on December 31, 2022, from a supplier with terms FOB destination, costing $ 9,900. Because the goods had not arrived, they were excluded from the physical inventory count.
(b)
On December 27, 2022, a regular customer purchased goods for cash amounting to $ 1,150 and had them shipped to a bonded warehouse for temporary storage on December 28, 2022. The goods were shipped via common carrier with terms FOB shipping point. The customer picked the goods up from the warehouse on January 4, 2023. Blue Spruce Company had paid $ 575 for the goods and, because they were in storage, Blue Spruce included them in the physical inventory count.
(c)
Blue Spruce Company, on the date of the inventory, received notice from a supplier that goods ordered earlier, at a cost of $ 3,300, had been delivered to the transportation company on December 28, 2022; the terms were FOB shipping point. Because the shipment had not arrived on December 31, 2022, it was excluded from the physical inventory.
(d)
On December 31, 2022, there were goods in transit to customers, with terms FOB shipping point, amounting to $ 850 (expected delivery on January 8, 2023). Because the goods had been shipped, they were excluded from the physical inventory count.
(e)
On December 31, 2022, Blue Spruce Company shipped $ 2,900 worth of goods to a customer, FOB destination. The goods arrived on January 5, 2023. Because the goods were not on hand, they were not included in the physical inventory count.
(f)
Blue Spruce Company, as the consignee, had goods on consignment that cost $ 2,900. Because these goods were on hand as of December 31, 2022, they were included in the physical inventory count.
...
E8-13Altira Corporation uses a periodic inventory system. The fo.docxjacksnathalie
E8-13
Altira Corporation uses a periodic inventory system. The following information related to its merchandise inventory during the month of August 2011 is available:
Aug 1 Inventory on hand - 2,000 units; cost $6.10 each.
Aug 8 Purchased 10,000 units for $5.50 each.
Aug 14 Sold 8,000 units for $12.00 each.
Aug 18 Purchased 60,000 units for $5.00 each.
Aug 25 Sold 7,000 units for $11.00 each.
Aug 31 Inventory on hand – 3,000 units.
Required:
Determine the inventory balance Altira would report in its August 31, 2011, balance sheet and the cost of goods sold it would report in its August 2011 income statement using each of the following cost flow methods:
1. First-in, First-out (FIFO)
2. Last-in, First-out (LIFO)
3. Average Cost
E8-14
[This is a variation of Exercise 8-13 modified to focus on the perpetual inventory system and alternative cost flow methods.]
Altira Corporation uses a perpetual inventory system. The following transactions affected its merchandise inventory during the month of August 2011:
Aug 1 Inventory on hand – 2,000 units; cost $6.10 each.
Aug 8 Purchased 10,000 units for $5.50 each
Aug 14 Sold 8,000 units for $12.00 each
Aug 18 Purchased 6,000 units for $5.00 each
Aug 25 Sold 7,000 units for $11.00 each.
Aug 31 Inventory on hand – 3,000 units.
Required:
Determine the inventory balance Altira would report in its August 31, 2011 balance sheet and the cost of goods sold it would report in its August 2011 income statement using each of the following cost flow methods:
1. First-in, First-out (FIFO)
2. Last-in, First-out (LIFO)
3. Average Cost
E8-18
Steelcase, Inc. is the global leader in providing furniture for office environments. The company uses the LIFO inventory method for external reporting and for income tax purposes but maintains its internal records using FIFO. The following disclosure note was included in a recent annual report:
5. Inventories ($in millions)
February 27, 2009
February 29, 2008
Raw Materials
$61.3
$67.5
Work-in-Process
15.9
20.9
Finished Goods
79.9
87.9
157.1
176.3
LIFO reserve
(27.2)
(29.6)
$129.9
$146.7
The company’s income statement reported cost of goods sold of $2,236.7 million for the fiscal year ended February 27, 2009.
Required:
1. Steelcase adjusts the LIFO reserve at the end of its fiscal year. Prepare the February 27, 2009 adjusting entry to make the cost of goods sold adjustment.
2. If Steelcase had used FIFO to value its inventories, what would cost of goods sold have been for the 2009 fiscal year?
P 8-5
Ferris Company began 2011 with 6,00o units of its principal product. The cost of each unit is $8. Merchandise transactions for the month of January 2011 are as follows:
Purchases
Date of Purchase
Units
Unit Cost*
Total Cost
Jan. 10
5,000
$9
$45,000
Jan. 18
6,000
10
60,000
Totals
11,000
$105,000
*Includes purchase price and cost of freight.
Sales
Date of Sale
Units
Jan. 5
3,000
Jan. 12
2,000
Jan. 20
4,000
Total
9,000
8,000 units were on hand at th ...
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Beginning inventory, purchases, and sales data for personal organi.docxikirkton
Beginning inventory, purchases, and sales data for personal organizers are as follows:
Jan 1 Beginning Inventory 45 units @ $24
3 Sold 35 units
8 Purchased 70 units @ $32
21 Sold 65 units
30 Purchased 25 units @ $47
Instructions:1 - Using the above transactions prepare the perpetual inventory record using each of the costing methods listed below. 2 – In the space provided below identify the ending inventory balance and cost of goods sold for June under each method.
a) FIFO
b) LIFO
c) Weighted Average (Round unit cost to the nearest cent and total
costs to the nearest dollar)
FIFO
FIFO
Purchases
Cost of Goods Sold
Inventory On Hand
Date
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Jan 1
45
24
1080
Jan 3
Ending Inventory:
Cost of Goods Sold:
LIFO
LIFO
Purchases
Cost of Goods Sold
Inventory On Hand
Date
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Ending Inventory:
Cost of Goods Sold:
Weighted Average
Weighted Average
Purchases
Cost of Goods Sold
Inventory On Hand
Date
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Ending Inventory:
Cost of Goods Sold:
Problem 3 (14 points)
Lawlor Lawn Service had the following transactions in June. Prepare journal entries for these transactions assuming Lawlor Lawn Service uses a perpetual inventory system.
Jun 2 Completed lawn service and received cash of $800
5 Purchased 110 plants on account for inventory, $304, plus freight in
of $15
15 Sold 60 plants on account, $600
17 Consulted with a client on landscaping design for a fee of $250 on
account
20 Purchased 120 plants on account for inventory, $384
21 Paid on account, $400
25 Sold 110 plants for cash, $990
Extra Credit for June 30th transaction
30 Recorded the following adjusting entries
Depreciation, $30
Physical count of plant inventory, 30 plants
GENERAL JOURNAL
DATE
DESCRIPTION
REF
DEBIT
CREDIT
...
Beginning inventory, purchases, and sales data for personal organize.docxtaitcandie
Beginning inventory, purchases, and sales data for personal organizers are as follows:
Jan
1
Beginning Inventory
45 units @ $24
3
Sold
35 units
8
Purchased
70 units @ $32
21
Sold
65 units
30
Purchased
25 units @ $47
Instructions:
1 - Using the above transactions prepare the perpetual inventory record using each of the costing methods listed below. 2 – In the space provided below identify the ending inventory balance and cost of goods sold for June under each method
.
a)
FIFO
b)
LIFO
c)
Weighted Average (Round unit cost to the nearest cent and total
costs to the nearest dollar)
FIFO
FIFO
Purchases
Cost of Goods Sold
Inventory On Hand
Date
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Jan 1
45
24
1080
Jan 3
Ending Inventory:
Cost of Goods Sold:
LIFO
LIFO
Purchases
Cost of Goods Sold
Inventory On Hand
Date
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Ending Inventory:
Cost of Goods Sold:
Weighted Average
Weighted Average
Purchases
Cost of Goods Sold
Inventory On Hand
Date
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Ending Inventory:
Cost of Goods Sold:
Problem 3 (14 points)
Lawlor Lawn Service had the following transactions in June.
Prepare journal entries for these transactions assuming Lawlor Lawn Service uses a perpetual inventory system.
Jun
2
Completed lawn service and received cash of $800
5
Purchased 110 plants on account for inventory, $304, plus freight in
of $15
15
Sold 60 plants on account, $600
17
Consulted with a client on landscaping design for a fee of $250 on
account
20
Purchased 120 plants on account for inventory, $384
21
Paid on account, $400
25
Sold 110 plants for cash, $990
Extra Credit for June 30
th
transaction
30
Recorded the following adjusting entries
Depreciation, $30
Physical count of plant inventory, 30 plants
GENERAL JOURNAL
DATE
DESCRIPTION
REF
DEBIT
CREDIT
.
Perpetual and Periodic inventory valuation methods are discussed in this presentation. The systems are explained using the different valuations methods (FIFO, LIFO and AVG).
1. True or false. Unlike a merchandising business, a manufacturingAbbyWhyte974
1. True or false. Unlike a merchandising business, a manufacturing business uses multiple inventory accounts to reflect the cost of raw materials, partially completed goods, and finished goods.
TRUE
FALSE
2.5 points
QUESTION 2
1. For a manufacturing business, the finished goods inventory account reflects the cost of what?
Shipping
Partially completed goods
Completed goods
Raw materials
2.5 points
QUESTION 3
1. Super Goods, an electronics retailer, purchases $80,000 worth of computers from a manufacturer in Taiwan. The terms of the purchase are FOB shipping point. Freight costs total $9,000. The goods are shipped on June 1 and delivered on June 15. On June 1, which two accounts should be debited by Super Goods in the following journal entry? Date Account Dr. Cr. 6-01-XX 80000.00 9000.00 Accounts Payable 89000.00
Inventory and Freight-out
Accounts Receivable and Freight-out
Inventory and Freight-in
Accounts Receivable and Freight-in
2.5 points
QUESTION 4
1. At the time of shipment, goods that are purchased FOB shipping point are
reported on the seller's balance sheet.
considered the responsibility of the buyer.
designated as freight-out.
categorized as partially completed inventory.
2.5 points
QUESTION 5
1. On February 15, a buyer purchases $30,000 worth of goods from a manufacturer. The manufacturer offers the buyer a 3% discount ($900) if payment for the goods is made within 10 days. The buyer pays for the merchandise on February 20. In a journal entry, the seller should debit ________ and credit ________ for $900.
Sales; Purchase Discounts
Accounts Receivable; Sales
Sales; Accounts Receivable
Accounts Payable; Inventory
2.5 points
QUESTION 6
1. A buyer receives a sales discount from a seller for paying for purchased goods within a specific period of time. In what way does the sales discount affects the buyer?
Reducing freight-in costs
Reducing the cost of inventory
Increasing freight-out costs
Increasing the cost of inventory
2.5 points
QUESTION 7
1. For a manufacturing business, the __________ inventory account reflects the cost of products that have been manufactured and are ready to be sold.
Raw materials
Work-in-process
Freight-in
Finished goods
2.5 points
QUESTION 8
1. Which term refers to goods that a merchandising business purchases and resells?
Inputs
Frieght
Supplies
Inventory
2.5 points
QUESTION 9
1. On February 15, a buyer purchases $10,000 worth of goods from a manufacturer, who spent $5,000 to manufacture the goods. The terms of sale are FOB shipping point, and shipping costs are $800. The goods will be shipped on June 1. The manufacturer must make two journal entries on June 1. In the second journal entry, the manufacturer should debit ________ and credit ________. Date Account Dr. Cr. 6-01-XX Accounts Receivable 10,000.00 Cash 800.00 Sales 10,000.00 Date Account Dr. Cr. 6-01-XX 5,000.00 5,000.00
Cash; Cost of Goods Sold
Cost of Goods Sold; ...
1. True or false. Unlike a merchandising business, a manufacturingSantosConleyha
1. True or false. Unlike a merchandising business, a manufacturing business uses multiple inventory accounts to reflect the cost of raw materials, partially completed goods, and finished goods.
TRUE
FALSE
2.5 points
QUESTION 2
1. For a manufacturing business, the finished goods inventory account reflects the cost of what?
Shipping
Partially completed goods
Completed goods
Raw materials
2.5 points
QUESTION 3
1. Super Goods, an electronics retailer, purchases $80,000 worth of computers from a manufacturer in Taiwan. The terms of the purchase are FOB shipping point. Freight costs total $9,000. The goods are shipped on June 1 and delivered on June 15. On June 1, which two accounts should be debited by Super Goods in the following journal entry? Date Account Dr. Cr. 6-01-XX 80000.00 9000.00 Accounts Payable 89000.00
Inventory and Freight-out
Accounts Receivable and Freight-out
Inventory and Freight-in
Accounts Receivable and Freight-in
2.5 points
QUESTION 4
1. At the time of shipment, goods that are purchased FOB shipping point are
reported on the seller's balance sheet.
considered the responsibility of the buyer.
designated as freight-out.
categorized as partially completed inventory.
2.5 points
QUESTION 5
1. On February 15, a buyer purchases $30,000 worth of goods from a manufacturer. The manufacturer offers the buyer a 3% discount ($900) if payment for the goods is made within 10 days. The buyer pays for the merchandise on February 20. In a journal entry, the seller should debit ________ and credit ________ for $900.
Sales; Purchase Discounts
Accounts Receivable; Sales
Sales; Accounts Receivable
Accounts Payable; Inventory
2.5 points
QUESTION 6
1. A buyer receives a sales discount from a seller for paying for purchased goods within a specific period of time. In what way does the sales discount affects the buyer?
Reducing freight-in costs
Reducing the cost of inventory
Increasing freight-out costs
Increasing the cost of inventory
2.5 points
QUESTION 7
1. For a manufacturing business, the __________ inventory account reflects the cost of products that have been manufactured and are ready to be sold.
Raw materials
Work-in-process
Freight-in
Finished goods
2.5 points
QUESTION 8
1. Which term refers to goods that a merchandising business purchases and resells?
Inputs
Frieght
Supplies
Inventory
2.5 points
QUESTION 9
1. On February 15, a buyer purchases $10,000 worth of goods from a manufacturer, who spent $5,000 to manufacture the goods. The terms of sale are FOB shipping point, and shipping costs are $800. The goods will be shipped on June 1. The manufacturer must make two journal entries on June 1. In the second journal entry, the manufacturer should debit ________ and credit ________. Date Account Dr. Cr. 6-01-XX Accounts Receivable 10,000.00 Cash 800.00 Sales 10,000.00 Date Account Dr. Cr. 6-01-XX 5,000.00 5,000.00
Cash; Cost of Goods Sold
Cost of Goods Sold; ...
1 The ending merchandise inventory for 2007 is the same as the be.docxdorishigh
1: The ending merchandise inventory for 2007 is the same as the beginning merchandise inventory for 2008.
True
False
2: If merchandise costing 2,500 dollars, terms FOB destination, 2/10, n/30, with prepaid transportation costs of 100 dollars, is paid within 10 days, the amount of the purchases discount is 50 dollars.
Also an example in the lecture notes. 2500 x .02 = $50.
True
False
3: Under the periodic inventory system, the merchandise inventory account continuously discloses the amount of inventory on hand.
True
False
4: From PR 6-5B, which of the following journal entries is correct for April 3?
a. (Debit) Merchandise Inventory 25,200 dollars
(Credit) Accounts Payable—Prescott Co. 25,200 dollars
b. (Debit) Merchandise Inventory 42,200 dollars
(Credit) Accounts Payable—Prescott Co.$42,200 dollars
c. (Debit) Merchandise Inventory 25,000 dollars
(Credit) Accounts Payable—Prescott Co. 25,000 dollars
d. (Debit) Merchandise Inventory 42,000 dollars
(Credit) Accounts Payable—Prescott Co. 42,000 dollars
5: From PR 6-5B, which of the following journal entries is correct for April 24?
a. (Debit) Accounts Receivable—Alma Co.8,200 dollars
(Credit) Sales 8,200 dollars
b. (Debit) Accounts Receivable—Alma Co.9,200 dollars
(Credit) Sales 9,200 dollars
c. (Debit) Accounts Receivable—Alma Co.10,200 dollars
(Credit) Sales 10,200 dollars
d. (Debit) Sales 9,200 dollars
(Credit) Accounts Receivable—Alma Co.9,200 dollars
6: From EX 7-7, the total cost of ending inventory according to (a) FIFO is:
a. 19,000 dollars
b. 19,100 dollars
c. 19,200 dollars
d. 19,300 dollars
7: From EX 7-8, the inventory cost by (b) the LIFO method is:
a. 6,515 dollars
b. 6,313 dollars
c. 6,715 dollars
d. 6,414 dollars
8: From EX 7-8, the inventory cost by (C) the Average Cost method is:
a. 7,250 dollars
b. 7,350 dollars
c. 7,360 dollars
d. 7,390 dollars
9: Appendix EX 7-19, the April 30 cost of merchandise inventory is:
a. 161,000 dollars
b. 163,000 dollars
c. 165,000 dollars
d. 167,000 dollars
10: Appendix EX 7-21, estimated ending merchandise inventory is:
a. 270,000 dollars
b. 271,000 dollars
c. 272,000 dollars
d. 273,000 dollars
2.
(No template needed)
a.
b.
3.
(No template needed)
a.
b.
c.
4.
Merchandise available for sale
Less cost of merchandise sold
Estimated ending merchandise inventory $
5.
Cost
Retail
Merchandise inventory, April 1
$ 180,000
$ 300,000
Purchases in April (net)
1,200,000
2,000,000
Merchandise available for sale
Ratio of cost to retail price:
=
Sales for September (net)
Merchandise inventory, April 30, at retail
Multiply by ratio of cost to retail price:
x
Merchandise inventory, April 30, at estimated cost
The following were selected from among the transactions completed by Calworks Company during April of ...
1.Kingbird, Inc. took a physical inventory on December 31 and deteTatianaMajor22
1.Kingbird, Inc. took a physical inventory on December 31 and determined that goods costing $230,000 were on hand. Not included in the physical count were $31,000 of goods purchased from Blue Spruce Corp., FOB, shipping point, and $20,500 of goods sold to Blossom Company for $30,000, FOB destination. Both the Blue Spruce purchase and the Blossom sale were in transit at year-end.
What amount should Kingbird report as its December 31 inventory?
Ending Inventory
2. In its first month of operations, Sheridan Company made three purchases of merchandise in the following sequence: (1) 240 units at $3, (2) 340 units at $5, and (3) 440 units at $6. Assuming there are 140 units on hand at the end of the period, compute the cost of the ending inventory under (a) the FIFO method and (b) the LIFO method. Sheridan Company uses a periodic inventory system.
FIFO
LIFO
The Ending Inventory
$Enter a dollar amount
$Enter a dollar amount
3. The Blue Spruce Company has just completed a physical inventory count at year end, December 31, 2022. Only the items on the shelves, in storage, and in the receiving area were counted and costed on the FIFO basis. The inventory amounted to $ 77,300. During the audit, the independent CPA discovered the following additional information:
(a)
There were goods in transit on December 31, 2022, from a supplier with terms FOB destination, costing $ 9,900. Because the goods had not arrived, they were excluded from the physical inventory count.
(b)
On December 27, 2022, a regular customer purchased goods for cash amounting to $ 1,150 and had them shipped to a bonded warehouse for temporary storage on December 28, 2022. The goods were shipped via common carrier with terms FOB shipping point. The customer picked the goods up from the warehouse on January 4, 2023. Blue Spruce Company had paid $ 575 for the goods and, because they were in storage, Blue Spruce included them in the physical inventory count.
(c)
Blue Spruce Company, on the date of the inventory, received notice from a supplier that goods ordered earlier, at a cost of $ 3,300, had been delivered to the transportation company on December 28, 2022; the terms were FOB shipping point. Because the shipment had not arrived on December 31, 2022, it was excluded from the physical inventory.
(d)
On December 31, 2022, there were goods in transit to customers, with terms FOB shipping point, amounting to $ 850 (expected delivery on January 8, 2023). Because the goods had been shipped, they were excluded from the physical inventory count.
(e)
On December 31, 2022, Blue Spruce Company shipped $ 2,900 worth of goods to a customer, FOB destination. The goods arrived on January 5, 2023. Because the goods were not on hand, they were not included in the physical inventory count.
(f)
Blue Spruce Company, as the consignee, had goods on consignment that cost $ 2,900. Because these goods were on hand as of December 31, 2022, they were included in the physical inventory count.
...
E8-13Altira Corporation uses a periodic inventory system. The fo.docxjacksnathalie
E8-13
Altira Corporation uses a periodic inventory system. The following information related to its merchandise inventory during the month of August 2011 is available:
Aug 1 Inventory on hand - 2,000 units; cost $6.10 each.
Aug 8 Purchased 10,000 units for $5.50 each.
Aug 14 Sold 8,000 units for $12.00 each.
Aug 18 Purchased 60,000 units for $5.00 each.
Aug 25 Sold 7,000 units for $11.00 each.
Aug 31 Inventory on hand – 3,000 units.
Required:
Determine the inventory balance Altira would report in its August 31, 2011, balance sheet and the cost of goods sold it would report in its August 2011 income statement using each of the following cost flow methods:
1. First-in, First-out (FIFO)
2. Last-in, First-out (LIFO)
3. Average Cost
E8-14
[This is a variation of Exercise 8-13 modified to focus on the perpetual inventory system and alternative cost flow methods.]
Altira Corporation uses a perpetual inventory system. The following transactions affected its merchandise inventory during the month of August 2011:
Aug 1 Inventory on hand – 2,000 units; cost $6.10 each.
Aug 8 Purchased 10,000 units for $5.50 each
Aug 14 Sold 8,000 units for $12.00 each
Aug 18 Purchased 6,000 units for $5.00 each
Aug 25 Sold 7,000 units for $11.00 each.
Aug 31 Inventory on hand – 3,000 units.
Required:
Determine the inventory balance Altira would report in its August 31, 2011 balance sheet and the cost of goods sold it would report in its August 2011 income statement using each of the following cost flow methods:
1. First-in, First-out (FIFO)
2. Last-in, First-out (LIFO)
3. Average Cost
E8-18
Steelcase, Inc. is the global leader in providing furniture for office environments. The company uses the LIFO inventory method for external reporting and for income tax purposes but maintains its internal records using FIFO. The following disclosure note was included in a recent annual report:
5. Inventories ($in millions)
February 27, 2009
February 29, 2008
Raw Materials
$61.3
$67.5
Work-in-Process
15.9
20.9
Finished Goods
79.9
87.9
157.1
176.3
LIFO reserve
(27.2)
(29.6)
$129.9
$146.7
The company’s income statement reported cost of goods sold of $2,236.7 million for the fiscal year ended February 27, 2009.
Required:
1. Steelcase adjusts the LIFO reserve at the end of its fiscal year. Prepare the February 27, 2009 adjusting entry to make the cost of goods sold adjustment.
2. If Steelcase had used FIFO to value its inventories, what would cost of goods sold have been for the 2009 fiscal year?
P 8-5
Ferris Company began 2011 with 6,00o units of its principal product. The cost of each unit is $8. Merchandise transactions for the month of January 2011 are as follows:
Purchases
Date of Purchase
Units
Unit Cost*
Total Cost
Jan. 10
5,000
$9
$45,000
Jan. 18
6,000
10
60,000
Totals
11,000
$105,000
*Includes purchase price and cost of freight.
Sales
Date of Sale
Units
Jan. 5
3,000
Jan. 12
2,000
Jan. 20
4,000
Total
9,000
8,000 units were on hand at th ...
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Beginning inventory, purchases, and sales data for personal organi.docxikirkton
Beginning inventory, purchases, and sales data for personal organizers are as follows:
Jan 1 Beginning Inventory 45 units @ $24
3 Sold 35 units
8 Purchased 70 units @ $32
21 Sold 65 units
30 Purchased 25 units @ $47
Instructions:1 - Using the above transactions prepare the perpetual inventory record using each of the costing methods listed below. 2 – In the space provided below identify the ending inventory balance and cost of goods sold for June under each method.
a) FIFO
b) LIFO
c) Weighted Average (Round unit cost to the nearest cent and total
costs to the nearest dollar)
FIFO
FIFO
Purchases
Cost of Goods Sold
Inventory On Hand
Date
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Jan 1
45
24
1080
Jan 3
Ending Inventory:
Cost of Goods Sold:
LIFO
LIFO
Purchases
Cost of Goods Sold
Inventory On Hand
Date
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Ending Inventory:
Cost of Goods Sold:
Weighted Average
Weighted Average
Purchases
Cost of Goods Sold
Inventory On Hand
Date
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Ending Inventory:
Cost of Goods Sold:
Problem 3 (14 points)
Lawlor Lawn Service had the following transactions in June. Prepare journal entries for these transactions assuming Lawlor Lawn Service uses a perpetual inventory system.
Jun 2 Completed lawn service and received cash of $800
5 Purchased 110 plants on account for inventory, $304, plus freight in
of $15
15 Sold 60 plants on account, $600
17 Consulted with a client on landscaping design for a fee of $250 on
account
20 Purchased 120 plants on account for inventory, $384
21 Paid on account, $400
25 Sold 110 plants for cash, $990
Extra Credit for June 30th transaction
30 Recorded the following adjusting entries
Depreciation, $30
Physical count of plant inventory, 30 plants
GENERAL JOURNAL
DATE
DESCRIPTION
REF
DEBIT
CREDIT
...
Beginning inventory, purchases, and sales data for personal organize.docxtaitcandie
Beginning inventory, purchases, and sales data for personal organizers are as follows:
Jan
1
Beginning Inventory
45 units @ $24
3
Sold
35 units
8
Purchased
70 units @ $32
21
Sold
65 units
30
Purchased
25 units @ $47
Instructions:
1 - Using the above transactions prepare the perpetual inventory record using each of the costing methods listed below. 2 – In the space provided below identify the ending inventory balance and cost of goods sold for June under each method
.
a)
FIFO
b)
LIFO
c)
Weighted Average (Round unit cost to the nearest cent and total
costs to the nearest dollar)
FIFO
FIFO
Purchases
Cost of Goods Sold
Inventory On Hand
Date
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Jan 1
45
24
1080
Jan 3
Ending Inventory:
Cost of Goods Sold:
LIFO
LIFO
Purchases
Cost of Goods Sold
Inventory On Hand
Date
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Ending Inventory:
Cost of Goods Sold:
Weighted Average
Weighted Average
Purchases
Cost of Goods Sold
Inventory On Hand
Date
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Ending Inventory:
Cost of Goods Sold:
Problem 3 (14 points)
Lawlor Lawn Service had the following transactions in June.
Prepare journal entries for these transactions assuming Lawlor Lawn Service uses a perpetual inventory system.
Jun
2
Completed lawn service and received cash of $800
5
Purchased 110 plants on account for inventory, $304, plus freight in
of $15
15
Sold 60 plants on account, $600
17
Consulted with a client on landscaping design for a fee of $250 on
account
20
Purchased 120 plants on account for inventory, $384
21
Paid on account, $400
25
Sold 110 plants for cash, $990
Extra Credit for June 30
th
transaction
30
Recorded the following adjusting entries
Depreciation, $30
Physical count of plant inventory, 30 plants
GENERAL JOURNAL
DATE
DESCRIPTION
REF
DEBIT
CREDIT
.
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Letter from the Congress of the United States regarding Anti-Semitism sent June 3rd to MIT President Sally Kornbluth, MIT Corp Chair, Mark Gorenberg
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The US House of Representatives is deeply concerned by ongoing and pervasive acts of antisemitic
harassment and intimidation at the Massachusetts Institute of Technology (MIT). Failing to act decisively to ensure a safe learning environment for all students would be a grave dereliction of your responsibilities as President of MIT and Chair of the MIT Corporation.
This Congress will not stand idly by and allow an environment hostile to Jewish students to persist. The House believes that your institution is in violation of Title VI of the Civil Rights Act, and the inability or
unwillingness to rectify this violation through action requires accountability.
Postsecondary education is a unique opportunity for students to learn and have their ideas and beliefs challenged. However, universities receiving hundreds of millions of federal funds annually have denied
students that opportunity and have been hijacked to become venues for the promotion of terrorism, antisemitic harassment and intimidation, unlawful encampments, and in some cases, assaults and riots.
The House of Representatives will not countenance the use of federal funds to indoctrinate students into hateful, antisemitic, anti-American supporters of terrorism. Investigations into campus antisemitism by the Committee on Education and the Workforce and the Committee on Ways and Means have been expanded into a Congress-wide probe across all relevant jurisdictions to address this national crisis. The undersigned Committees will conduct oversight into the use of federal funds at MIT and its learning environment under authorities granted to each Committee.
• The Committee on Education and the Workforce has been investigating your institution since December 7, 2023. The Committee has broad jurisdiction over postsecondary education, including its compliance with Title VI of the Civil Rights Act, campus safety concerns over disruptions to the learning environment, and the awarding of federal student aid under the Higher Education Act.
• The Committee on Oversight and Accountability is investigating the sources of funding and other support flowing to groups espousing pro-Hamas propaganda and engaged in antisemitic harassment and intimidation of students. The Committee on Oversight and Accountability is the principal oversight committee of the US House of Representatives and has broad authority to investigate “any matter” at “any time” under House Rule X.
• The Committee on Ways and Means has been investigating several universities since November 15, 2023, when the Committee held a hearing entitled From Ivory Towers to Dark Corners: Investigating the Nexus Between Antisemitism, Tax-Exempt Universities, and Terror Financing. The Committee followed the hearing with letters to those institutions on January 10, 202
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Under Augustus, the empire experienced the Pax Romana, a 200-year period of relative peace and stability. Augustus reformed the military, established efficient administrative systems, and initiated grand construction projects. The empire's borders expanded, encompassing territories from Britain to Egypt and from Spain to the Euphrates. Roman legions, renowned for their discipline and engineering prowess, secured and maintained these vast territories, building roads, fortifications, and cities that facilitated control and integration.
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Roman architecture and engineering achievements were monumental. They perfected the arch, vault, and dome, constructing enduring structures like the Colosseum, Pantheon, and aqueducts. These engineering marvels not only showcased Roman ingenuity but also served practical purposes, from public entertainment to water supply.
Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
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Synthetic fiber production is a fascinating and complex field that blends chemistry, engineering, and environmental science. By understanding these aspects, students can gain a comprehensive view of synthetic fiber production, its impact on society and the environment, and the potential for future innovations. Synthetic fibers play a crucial role in modern society, impacting various aspects of daily life, industry, and the environment. ynthetic fibers are integral to modern life, offering a range of benefits from cost-effectiveness and versatility to innovative applications and performance characteristics. While they pose environmental challenges, ongoing research and development aim to create more sustainable and eco-friendly alternatives. Understanding the importance of synthetic fibers helps in appreciating their role in the economy, industry, and daily life, while also emphasizing the need for sustainable practices and innovation.
2. Why is Inventory Control
Important?
Inventory is a significant asset and for many
companies the largest asset.
Inventory is central to the main activity of
merchandising and manufacturing
companies.
Mistakes in determining inventory cost can
cause critical errors in financial statements.
Inventory must be protected from external
risks ( such as fire and theft) and internal
fraud by employees.
4. LIABILITIES
OWNER’S
EQUITY
REVENUES
ASSETS
COSTS &
EXPENSES
Effect of Inventory Errors on
Financial Statements
Merchandise
Inventory
Cost of
Merchandise Sold
If merchandise inventory is . . . . . . .
Cost of merchandise sold is . . . . . .
Gross profit and net income are . . .
Ending owner’s equity is . . . . . . . . .
overstated
understated
overstated
overstated
Net Income
5. If merchandise inventory is . . . . . . .
Cost of merchandise sold is . . . . . .
Gross profit and net income are . . .
Ending owner’s equity is . . . . . . . . .
understated
overstated
understated
understated
Effect of Inventory Errors on
Financial Statements
10. Perpetual Inventory Costs
Inventory cost data to demonstrate
FIFO and LIFO Perpetual Systems
Cost of
Mdse. Sold
Item 127B Units Cost Price
Jan. 1 Inventory 10 $20
4 Sale 7 $30
10 Purchase 8 21
22 Sale 4 31
28 Sale 2 32
30 Purchase 10 22
11.
12. FIFO ( Cost Accounting)
• FIFO is most useable technique of valuation
of material issue in manufacturing and
trading industries.
• It means First in, First Out.
• We will send that material for
production first which we bought first.
• We also record the cost of issue on this basis.
13. • Closing stock's value in store will be the
purchase value of material which we
purchased at the end.
• This system of valuation of cost is very useful
where there is the trend of decreasing prices,
because we will charge high cost to the units
which we bought earlier to new.
• But this method is not useful in the trend of
increasing prices.
14. Merits of FIFO Method
• This method is very logical because material
should be issued first which we bought first.
• Because we issue the material at its purchase
price, so closing stock can be calculated correctly.
• Closing stock's cost automatically shows the
market price.
15. Demerits of FIFO Method
• In case, there is fluctuation in prices, we can
not calculate correct cost of material issued.
• We also can not compare on job's cost with
other job's cost in case prices are fluctuating.
• This is not good method in inflation.
16. Item 127B
FIFO Perpetual Inventory Account
Purchases Cost of Mdse. Sold Inventory Balance
Unit Total Unit Total Unit Total
Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost
Jan. 1 10 20 200
The firm begins the year with 10
units of Item 127B on hand at a
total cost of $200.
17. Inventory cost data to demonstrate
FIFO and LIFO Perpetual Systems
Cost of
Mdse. Sold
Item 127B Units Cost Price
Jan. 1 Inventory 10 $20
4 Sale 7 $30
10 Purchase 8 21
22 Sale 4 31
28 Sale 2 32
30 Purchase 10 22
FIFO Perpetual Inventory Account
On January 4, 7 units of Item
127B are sold at $30 each.
18. Item 127B
FIFO Perpetual Inventory Account
Purchases Cost of Mdse. Sold Inventory Balance
Unit Total Unit Total Unit Total
Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost
The sale of 7 units leaves a
balance of 3 units.
Jan. 1 10 20 200
4 7 20 140 3 20 60
Jan. 1 10 20 200
On January 4, 7 units of Item
127B are sold at $30 each.
19. Inventory cost data to demonstrate
FIFO and LIFO Perpetual Systems
Cost of
Mdse. Sold
Item 127B Units Cost Price
Jan. 1 Inventory 10 $20
4 Sale 7 $30
10 Purchase 8 21
22 Sale 4 31
28 Sale 2 32
30 Purchase 10 22
FIFO Perpetual Inventory Account
On January 10, the firm purchased
eight units at $21 each.
20. Item 127B
FIFO Perpetual Inventory Account
Purchases Cost of Mdse. Sold Inventory Balance
Unit Total Unit Total Unit Total
Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost
Jan. 1 10 20 200
4 7 20 140 3 20 60
10 8 21 168 3 20 60
8 21 168
On January 10, the firm
purchased eight units at $21 each.
Because the purchase price of $21 is
different than the cost of the previous 3
units on hand, the inventory balance of
11 units is accounted for separately.
21. Inventory cost data to demonstrate
FIFO and LIFO Perpetual Systems
Cost of
Mdse. Sold
Item 127B Units Cost Price
Jan. 1 Inventory 10 $20
4 Sale 7 $30
10 Purchase 8 21
22 Sale 4 31
28 Sale 2 32
30 Purchase 10 22
FIFO Perpetual Inventory Account
On January 22, the firm sold
four units for $31 each.
22. Item 127B
Purchases Cost of Mdse. Sold Inventory Balance
Unit Total Unit Total Unit Total
Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost
Jan. 1 10 20 200
4 7 20 140 3 20 60
10 8 21 168 3 20 60
8 21 168
FIFO Perpetual Inventory Account
22 3 20 60
1 21 21 7 21 147
Of the four units sold, three are
from the first units in (fifo) at a
cost of $20.
On January 22, the
firm sold four units
for $31 each.
23. FIFO Perpetual Inventory Account
On January 28, the firm
sold two units at $32.
Inventory cost data to demonstrate
FIFO and LIFO Perpetual Systems
Cost of
Mdse. Sold
Item 127B Units Cost Price
Jan. 1 Inventory 10 $20
4 Sale 7 $30
10 Purchase 8 21
22 Sale 4 31
28 Sale 2 32
30 Purchase 10 22
24. Item 127B
Purchases Cost of Mdse. Sold Inventory Balance
Unit Total Unit Total Unit Total
Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost
Jan. 1 10 20 200
4 7 20 140 3 20 60
10 8 21 168 3 20 60
8 21 168
FIFO Perpetual Inventory Account
22 3 20 60
1 21 21 7 21 147
28 2 21 42 5 21 105
On January 28, the firm
sold two units at $32.
25. FIFO Perpetual Inventory Account
On January 30, purchased ten additional
units of Item 127B at $22 each.
Inventory cost data to demonstrate
FIFO and LIFO Perpetual Systems
Cost of
Mdse. Sold
Item 127B Units Cost Price
Jan. 1 Inventory 10 $20
4 Sale 7 $30
10 Purchase 8 21
22 Sale 4 31
28 Sale 2 32
30 Purchase 10 22
26. Item 127B
Purchases Cost of Mdse. Sold Inventory Balance
Unit Total Unit Total Unit Total
Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost
Jan. 1 10 20 200
4 7 20 140 3 20 60
10 8 21 168 3 20 60
8 21 168
FIFO Perpetual Inventory Account
22 3 20 60
1 21 21 7 21 147
28 2 21 42 5 21 105
30 10 22 220 5 21 105
10 22 220
Totals 18 $388 13 $263 15 $325
On January 30, purchased
ten additional units of Item
127B at $22 each.
27.
28. What is LIFO
• In this method of valuation of inventory, we
calculate the inventory issue cost by reverse
order.
• It means that we charge old quantities price
first for issue of material and then new prices
will be charged.
• It is just opposite of FIFO. It is most suitable in
inflation of prices.
29. • In other words, LIFO is last-in, first-out,
meaning that the most recently purchased
items are recorded as issued for production
first from store.
• If LIFO is used for calculating the cost of goods
sold and closing stock, then it will calculated
for calculating correct gross and net profit.
• At that time, we take last (latest) purchase
price for sold material first time.
30. Item 127B
LIFO Perpetual Inventory Account
Purchases Cost of Mdse. Sold Inventory Balance
Unit Total Unit Total Unit Total
Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost
Jan. 1 10 20 200
The firm begins the year with
10 units of Item 127B on
hand at a total cost of $200.
31. Item 127B
LIFO Perpetual Inventory Account
Purchases Cost of Mdse. Sold Inventory Balance
Unit Total Unit Total Unit Total
Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost
Jan. 1 10 20 200
4 7 20 140 3 20 60
On January 4, the firm sold
7 units at $30 each.
32. Item 127B
LIFO Perpetual Inventory Account
Purchases Cost of Mdse. Sold Inventory Balance
Unit Total Unit Total Unit Total
Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost
Jan. 1 10 20 200
4 7 20 140 3 20 60
10 8 21 168 3 20 60
8 21 168
On January 10, the
firm purchased eight
units at $21 each.
Note that a new
layer is formed.
33. Item 127B
LIFO Perpetual Inventory Account
Purchases Cost of Mdse. Sold Inventory Balance
Unit Total Unit Total Unit Total
Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost
Jan. 1 10 20 200
4 7 20 140 3 20 60
10 8 21 168 3 20 60
8 21 168
On January 22, the
firm sells four
units at $31 each.
22 4 21 84 3 20 60
4 21 84
Of the 4 units sold, all come
from the most recent purchase
at a cost of $21 each.
34. Item 127B
LIFO Perpetual Inventory Account
Purchases Cost of Mdse. Sold Inventory Balance
Unit Total Unit Total Unit Total
Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost
Jan. 1 10 20 200
4 7 20 140 3 20 60
10 8 21 168 3 20 60
8 21 168
On January 28, sold
two units at $32 each.
22 4 21 84 3 20 60
4 21 84
28 2 21 42 3 20 60
2 21 42
35. Item 127B
LIFO Perpetual Inventory Account
Purchases Cost of Mdse. Sold Inventory Balance
Unit Total Unit Total Unit Total
Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost
Jan. 1 10 20 200
4 7 20 140 3 20 60
10 8 21 168 3 20 60
8 21 168
On January 30, purchase
10 units at $22 each.
22 4 21 84 3 20 60
4 21 84
28 2 21 42 3 20 60
2 21 42
30 10 22 220 3 20 60
2 21 42
10 22 220
38. Jan. 1 Beginning
Inventory
200 units @ $9
Mar. 10 Purchase300 units @ $10
400 units @ $11 Sept. 21 Purchase
100 units @ $12 Nov. 18 Purchase
1,000 units available
for sale during
year
Fifo Periodic
39. Fifo Periodic
200 units @ $9
300 units @ $10
400 units @ $11
100 units @ $12
1,000 units available
for sale during
year
$10,400
= $1,800 Jan. 1
= 3,000 Mar. 10
= 4,400 Sept. 21
= 1,200 Nov. 18
Cost of merchandise
available for sale
40. Fifo Periodic
A physical count on
December 31 reveals that
700 of the 1,000 units
have been sold.
Using fifo, the first units
purchased are theoretically the
first units sold. We begin the
count with January 1.
41. Fifo Periodic
200 units @ $9
300 units @ $10
400 units @ $11
100 units @ $12
1,000 units available
for sale during
year
$10,400
= $1,800 Jan. 1
= 3,000 Mar. 10
= 4,400 Sept. 21
= 1,200 Nov. 18
Sold these 200
Sold these 300
Sold 200 of these200 units @ $11
= $ 0 Jan. 1
= 0 Mar. 10
= 2,200 Sept. 21
$ 3,400
Ending inventory
42. Cost of merchandise available for
sale $10,400
Less ending inventory 3,400
Cost of merchandise sold $ 7,000
Fifo Periodic
43. Jan. 1
200 units at $9
Summary of Fifo Periodic
Mar. 10
300 units at $10
Sep. 21
400 units at $11
Nov. 18
100 units at $12
$1,800
$3,000
$4,400
$1,200
Purchases
Merchandise
Available
for Sale
$1,800
$3,000
$2,200
Cost of
Merchandise
Sold
200 units at $9
$10,400
$2,200
$1,200
$7,000
Merchandise
Inventory
$3,400
300 units at $10
200 units at $11
200 units at $11
100 units at $12
1,000 units
700 units
300 units
45. Jan. 1 Beginning
Inventory
200 units @ $9
Mar. 10 Purchase300 units @ $10
400 units @ $11 Sept. 21 Purchase
100 units @ $12 Nov. 18 Purchase
1,000 units available
for sale during
year
Lifo Periodic
Using lifo, the most recent batch
purchased is considered the first
batch of merchandise sold.
46. Jan. 1 Beginning
Inventory
200 units @ $9
Mar. 10 Purchase300 units @ $10
400 units @ $11 Sept. 21 Purchase
100 units @ $12 Nov. 18 Purchase
1,000 units available
for sale during
year
Lifo Periodic
Assume again that
700 units were sold
during the year.
47. 200 units @ $9
300 units @ $10
400 units @ $11
100 units @ $12
1,000 units available
for sale during
year
Lifo Periodic
Sold these 100
Sold these 400
Sold 200 of these100 units @ $10
= $1,800 Jan. 1
= 3,000 Mar. 10
= 4,400 Sept. 21
= 1,200 Nov. 18
$10,400
0
0
1,000
Ending Inventory
$2,800
48. Cost of merchandise available for
sale $10,400
Less ending inventory 2,800
Cost of merchandise sold $ 7,600
Lifo Periodic
49. Jan. 1
200 units at $9
Summary of Lifo Periodic
Mar. 10
300 units at $10
Sep. 21
400 units at $11
Nov. 18
100 units at $12
$1,800
$3,000
$4,400
$1,200
$1,800
$1,000
Cost of
Merchandise
Sold
200 units at $9
$10,400
$4,400
$1,200
$2,800
$7,600
100 units at $10
200 units at $10
400 units at $11
100 units at $12
$2,000
700 units
1,000 units
300 units
Purchases
Merchandise
Available
for Sale
$1,800
Cost of
Merchandise Sold
50. Jan. 1 Beginning
Inventory
200 units @ $9
Mar. 10 Purchase300 units @ $10
400 units @ $11 Sept. 21 Purchase
100 units @ $12 Nov. 18 Purchase
1,000 units available
for sale during
year
The average cost
periodic method is based
on the average cost of
identical units.
Average Cost Periodic
51. Average Cost Periodic
200 units @ $9 = $ 1,800
1,000 units available
for sale during
year
300 units @ $10 = $ 3,000
400 units @ $11 = $ 4,400
100 units @ $11 = $ 1,200
$10,400 Cost of
merchandise
available for
sale
52. Cost of Merchandise
Available for Sale
Units Available for Sale
During Year
= Average Unit Cost
$10,400
1,000 Units
= $10.40 per Unit
Average Cost Periodic
53. Cost of merchandise available for sale $10,400
Less ending inventory ($10.40 x 300) 3,120
Cost of merchandise sold $ 7,280
To verify this
amount, multiply
700 units sold
times $10.40 to get
the same $7,280.
Average Cost Periodic
54. $ 3,800
2,700
4,650
3,920
Total $15,520 $15,472 $15,070
Valuation of Inventory at
Lower-of-Cost-or-Market
A 400 $10.25 $ 9.50 $ 4,100 $ 3,800
B 120 22.50 24.10 2,700 2,892
C 600 8.00 7.75 4,800 4,650
D 280 14.00 14.75 3,920 4,130
Unit Unit
Inventory Cost Market Total Total Lower
Item Quantity Price Price Cost Market C or M
The market decline based on individual items
($15,520 – $15,070) = $450
55. Assets
Current assets:
Cash $ 19 400 00
Accounts receivable $80 000 00
Less allowance for
doubtful accounts 3 000 00 77 000 00
Merchandise inventory
at lower of cost (first-in,
first-out method) or market 216 300 00
Metro-Arts
Balance Sheet
December 31, 2007
Presentation of Merchandise Inventory
on the Balance Sheet