Applying and Analyzing Inventory Costing Methods At the beginning of the current period, Chen carried 1,000 units of its product with a unit cost of $10. A summary of purchases during the current period follows. During the period, Chen sold 2,800 units. Units Unit Cost Cost $ 10 $10,000 Beginning Inventory 1,000 Purchase #1 1,800 800 1,200 Purchase #2 Purchase #3 (a) Assume that Chen uses the first-in, first-out method. Compute both cost of good sold for the current period and the ending inventory balance. Use the financial statement effects template to record cost of go Ending inventory balance $ Cost of goods sold Use negative signs with answers, when appropriate. $ Transaction Record FIFO cost of goods sold 11 19,800 13 10,400 15 18,000 Cash Asset + $ Balance Sheet Earned Noncash Contributed Assets - Liabilities + Capital + Capital Income Statement (b) Assume that Chen uses the last-in, first-out method. Compute both cost of good sold for the current period and the ending inventory balance. Ending inventory balance s Cost of goods sold Net Revenue - Expenses Income (d) Which of these three inventory costing methods would you choose to: 1. Reflect what is probably the physical flow of goods? OLIFO OFIFO OAverage Cost OLIFO OFIFO OAverage Cost 2. Minimize income taxes for the period? 3. Report the largest amount of income for the period? OLIFO OFIFO OAverage Cost (c) Assume that Chen uses the average cost method. Compute both cost of good sold for the current period and the ending inventory balance. (HINT: Do not round average cost per unit for calculations.) Ending inventory balance $ Cost of goods sold
Applying and Analyzing Inventory Costing Methods At the beginning of the current period, Chen carried 1,000 units of its product with a unit cost of $10. A summary of purchases during the current period follows. During the period, Chen sold 2,800 units. Units Unit Cost Cost $ 10 $10,000 Beginning Inventory 1,000 Purchase #1 1,800 800 1,200 Purchase #2 Purchase #3 (a) Assume that Chen uses the first-in, first-out method. Compute both cost of good sold for the current period and the ending inventory balance. Use the financial statement effects template to record cost of go Ending inventory balance $ Cost of goods sold Use negative signs with answers, when appropriate. $ Transaction Record FIFO cost of goods sold 11 19,800 13 10,400 15 18,000 Cash Asset + $ Balance Sheet Earned Noncash Contributed Assets - Liabilities + Capital + Capital Income Statement (b) Assume that Chen uses the last-in, first-out method. Compute both cost of good sold for the current period and the ending inventory balance. Ending inventory balance s Cost of goods sold Net Revenue - Expenses Income (d) Which of these three inventory costing methods would you choose to: 1. Reflect what is probably the physical flow of goods? OLIFO OFIFO OAverage Cost OLIFO OFIFO OAverage Cost 2. Minimize income taxes for the period? 3. Report the largest amount of income for the period? OLIFO OFIFO OAverage Cost (c) Assume that Chen uses the average cost method. Compute both cost of good sold for the current period and the ending inventory balance. (HINT: Do not round average cost per unit for calculations.) Ending inventory balance $ Cost of goods sold
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Topic Video
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 6 steps
Follow-up Questions
Read through expert solutions to related follow-up questions below.
Follow-up Question
Please explaim part B) and c? how Ending imventory balance calculated for both part of questions
Solution
by Bartleby Expert
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education