5) Day Company, which uses the FIFO inventory method, had 254,000 units in inventory at the beginning of the year at a FIFO cost per units of $30. No purchases were made during the year. Quarterly sales information and two sets of end of quarter replacement cost figures follow: Quarter Unit Sales Case A Case B S S 1 2 3 4 100,000 29 30,000 22 42,500 18 19 30,500 22 27 25 27 The market decline in the first quarter under Case A was expected to be temporary, whereas under Case B the decline was expected to be non temporary. Declines in other quarters were expected to be permanent. Required: Determining cost of goods sold for the four quarters under each case and verify the amounts by computing cost of goods sold using the lower of cost or market method applied on an annual basis.

5) Day Company, which uses the FIFO inventory method, had 254,000 units in inventory at the beginning of the year at a FIFO cost per units of $30. No purchases were made during the year. Quarterly sales information and two sets of end of quarter replacement cost figures follow: Quarter Unit Sales Case A Case B S S 1 2 3 4 100,000 29 30,000 22 42,500 18 19 30,500 22 27 25 27 The market decline in the first quarter under Case A was expected to be temporary, whereas under Case B the decline was expected to be non temporary. Declines in other quarters were expected to be permanent. Required: Determining cost of goods sold for the four quarters under each case and verify the amounts by computing cost of goods sold using the lower of cost or market method applied on an annual basis.

Name: 5) Day Company, which uses the FIFO inventory method, had254,000 unit
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Description: 5) Day Company, which uses the FIFO inventory method, had254,000 units in inventory at the beginning of the year at aFIFO cost per units of $30. No purchases were made duringthe year. Quarterly sales information and two sets of end ofquarter replace

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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In its first month of operation, Waterway Industries purchased 340 units of inventory for $9, then 440 units for $10, and finally 380 units for $11. At the end of the month, 420 units remained.Compute the amount of phantom profit that would result if the company used FIFO rather than LIFO. Phantom Profit =?
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