A. The following data about Grabs' inventory and purchases from May are available: Beginning Inventory and Purchases Sales Date Units Cost Total Units 1 Inventory 8 Purchase 10 Sale 24 Purchase May 2,800 $20 $ 56,000 1,200 22 26, 400 3,200 1,600 24 38,400 Totals 5,600 $120,800 3,200 Selling price per unit is $50. 1. Assuming that Grabs uses the periodic inventory system, compute the cost that should be assigned to the ending inventory and to the cost of goods sold, using (a) the average-cost method, (b) the FIFO method, and (c) the LIFO method. Compute gross profit under each methods. 2. Assuming that Grabs uses the perpetual inventory system, compute the cost that should be assigned to the ending inventory and to the cost of goods sold, using (a) the average-cost method, (b) the FIFO method, and (c) the LIFO method. Compute gross profit under each methods. B. Present the information in a multistep income statement and a single-step income statement for Pasica Linens Company for the Year Ended December 31, 20xx then indicate what insights can be obtained from the multistep form as opposed to the single-step form. Note that some accounts listed are not reported on the income statement. Long-Term Debt Accounts Payable $20,238 1,380 Net sales $1,197,132 4,220 Cash Cost of goods sold 777,080 Accounts Receivable 6,411 Selling expenses 203,740 Interest expense 13,560 Salaries Payable 331 Interest income 5,720 Other Operating Revenues 13,818 Other Operating Expenses 29,003 Unearned Revenue 1,473 Advertising Expense 7,612 Equipment 13,676 General and administrative expenses 100,688
A. The following data about Grabs' inventory and purchases from May are available: Beginning Inventory and Purchases Sales Date Units Cost Total Units 1 Inventory 8 Purchase 10 Sale 24 Purchase May 2,800 $20 $ 56,000 1,200 22 26, 400 3,200 1,600 24 38,400 Totals 5,600 $120,800 3,200 Selling price per unit is $50. 1. Assuming that Grabs uses the periodic inventory system, compute the cost that should be assigned to the ending inventory and to the cost of goods sold, using (a) the average-cost method, (b) the FIFO method, and (c) the LIFO method. Compute gross profit under each methods. 2. Assuming that Grabs uses the perpetual inventory system, compute the cost that should be assigned to the ending inventory and to the cost of goods sold, using (a) the average-cost method, (b) the FIFO method, and (c) the LIFO method. Compute gross profit under each methods. B. Present the information in a multistep income statement and a single-step income statement for Pasica Linens Company for the Year Ended December 31, 20xx then indicate what insights can be obtained from the multistep form as opposed to the single-step form. Note that some accounts listed are not reported on the income statement. Long-Term Debt Accounts Payable $20,238 1,380 Net sales $1,197,132 4,220 Cash Cost of goods sold 777,080 Accounts Receivable 6,411 Selling expenses 203,740 Interest expense 13,560 Salaries Payable 331 Interest income 5,720 Other Operating Revenues 13,818 Other Operating Expenses 29,003 Unearned Revenue 1,473 Advertising Expense 7,612 Equipment 13,676 General and administrative expenses 100,688
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter6: Cost Of Goods Sold And Inventory
Section: Chapter Questions
Problem 50E: Inventory Costing Methods Crandall Distributors uses a perpetual inventory system and has the...
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Transcribed Image Text:A. The following data about Grabs' inventory and purchases from May are available:
Beginning Inventory and Purchases
Sales
Date
Units
Cost
Total
Units
1 Inventory
8 Purchase
10 Sale
24 Purchase
May
2,800
$20
$ 56,000
1,200
22
26,400
3,200
1,600
24
38,400
Totals
5,600
$120,800
3,200
Selling price per unit is $50.
1. Assuming that Grabs uses the periodic inventory system, compute the cost that
should be assigned to the ending inventory and to the cost of goods sold, using (a)
the average-cost method, (b) the FIFO method, and (c) the LIFO method.
Compute gross profit under each methods.
2. Assuming that Grabs uses the perpetual inventory system, compute the cost that
should be assigned to the ending inventory and to the cost of goods sold, using (a)
the average-cost method, (b) the FIFO method, and (c) the LIFO method.
Compute gross profit under each methods.
B. Present the information in a multistep income statement and a single-step income
statement for Pasica Linens Company for the Year Ended December 31, 20xx then
indicate what insights can be obtained from the multistep form as opposed to the
single-step form. Note that some accounts listed are not reported on the income
statement.
$1,197,132
4,220
Long-Term Debt
Accounts Payable
Net sales
$20,238
Cash
1,380
Cost of goods sold
777,080
Accounts Receivable
6,411
Selling expenses
203,740
Interest expense
13,560
Salaries Payable
331
Interest income
5,720
Other Operating Revenues 13,818
Other Operating Expenses
29,003
Unearned Revenue
1,473
Advertising Expense
7,612
Equipment
13,676
General and administrative expenses 100,688
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