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Alternative Inventory Methods Garrett Company has the following transactions during the months of April and May: Date April 1 17 25 28 May 5 Transaction Units Balance Purchase Sale Purchase Purchase 18 Sale 22 Sale 300 200 150 100 250 300 50 Cost/Unit $5.40 5.80 5.40 The cost of the inventory on April 1 is $5, $4, and $2 per unit, respectively, under the FIFO, average, and LIFO cost flow assumptions.

Alternative Inventory Methods Garrett Company has the following transactions during the months of April and May: Date April 1 17 25 28 May 5 Transaction Units Balance Purchase Sale Purchase Purchase 18 Sale 22 Sale 300 200 150 100 250 300 50 Cost/Unit $5.40 5.80 5.40 The cost of the inventory on April 1 is $5, $4, and $2 per unit, respectively, under the FIFO, average, and LIFO cost flow assumptions.

FINANCIAL ACCOUNTING
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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Alternative Inventory Methods Garrett Company has the following transactions during the months of April and May: Date April 1 17 25 Sale 28 May 5 Transaction Units Cost/Unit 18 22 Balance Purchase Purchase Purchase Sale Sale 300 200 150 100 250 300 50 $5.40 5.80 5.40 The cost of the inventory on April 1 is $5, $4, and $2 per unit, respectively, under the FIFO, average, and LIFO cost flow assumptions.
Transcribed Image Text:Alternative Inventory Methods Garrett Company has the following transactions during the months of April and May: Date April 1 17 25 Sale 28 May 5 Transaction Units Cost/Unit 18 22 Balance Purchase Purchase Purchase Sale Sale 300 200 150 100 250 300 50 $5.40 5.80 5.40 The cost of the inventory on April 1 is $5, $4, and $2 per unit, respectively, under the FIFO, average, and LIFO cost flow assumptions.
Required: 1. Compute the inventories at the end of each month and the cost of goods sold for each month for the following alternatives: a. FIFO periodic Cost of Goods Sold Ending Inventory $ $ April May $ b. FIFO perpetual April May $ c. LIFO periodic April April May April May $ d. LIFO perpetual (Round your intermediate calculations to the nearest cent.) Cost of Goods Sold Ending Inventory $ May $ $ e. Weighted average (Round unit costs to 4 decimal places and final answers to the nearest dollar.) Cost of Goods Sold Ending Inventory $ April Cost of Goods Sold Ending Inventory May $ Difference Show Transcribed Text May Cost of Goods Sold Ending Inventory $ $ $ $ $ $ $ f. Moving average (Round unit costs to 2 decimal places and final answers to nearest dollar.) Cost of Goods Sold Ending Inventory $ $ $ $ Difference $ $ 2. Reconcile the difference between the LIFO periodic and the LIFO perpetual results. If an amount is zero, enter "0". Cost of Goods Sold Ending Inventory April $ Cost of Goods Sold Ending Inventory $ $ 3. If Garrett uses IFRS, which of the previous alternatives would be acceptable, and why? If Garrett Company uses IFRS, it may report its inventory under consistent with any presumed physical flow of inventory. Also, incentive for a company to use include holding gains in income. . It may not use under IFRS because it is not is not allowed for tax purposes in most other countries, so there is no tax ▼ Note that companies that use IFRS and have rising inventory costs will report a higher income because they
Transcribed Image Text:Required: 1. Compute the inventories at the end of each month and the cost of goods sold for each month for the following alternatives: a. FIFO periodic Cost of Goods Sold Ending Inventory $ $ April May $ b. FIFO perpetual April May $ c. LIFO periodic April April May April May $ d. LIFO perpetual (Round your intermediate calculations to the nearest cent.) Cost of Goods Sold Ending Inventory $ May $ $ e. Weighted average (Round unit costs to 4 decimal places and final answers to the nearest dollar.) Cost of Goods Sold Ending Inventory $ April Cost of Goods Sold Ending Inventory May $ Difference Show Transcribed Text May Cost of Goods Sold Ending Inventory $ $ $ $ $ $ $ f. Moving average (Round unit costs to 2 decimal places and final answers to nearest dollar.) Cost of Goods Sold Ending Inventory $ $ $ $ Difference $ $ 2. Reconcile the difference between the LIFO periodic and the LIFO perpetual results. If an amount is zero, enter "0". Cost of Goods Sold Ending Inventory April $ Cost of Goods Sold Ending Inventory $ $ 3. If Garrett uses IFRS, which of the previous alternatives would be acceptable, and why? If Garrett Company uses IFRS, it may report its inventory under consistent with any presumed physical flow of inventory. Also, incentive for a company to use include holding gains in income. . It may not use under IFRS because it is not is not allowed for tax purposes in most other countries, so there is no tax ▼ Note that companies that use IFRS and have rising inventory costs will report a higher income because they
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