solve it Blake Company purchased two identical inventory items. The itempurchased first cost $33.00, and the item purchased the second cost $34.00.Blake sold one of the items for $62.00. Which of the following statements istrue?a. Gross margin will be higher if Blake uses LIFO than it would be if FIFOwere used.b. The dollar amount assigned to ending inventory will be the same nomatter which cost flow method is used.c. Ending inventory will be lower if Blake uses weighted average than ifFIFO were used.d. Cost of goods sold will be higher if Blake uses FIFO than if the weightedaverage were used.

To determine which statement is correct, let us analyze the situation in detail. The problem…

Answered: Blake Company purchased two identical…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter10: Inventory

Section: Chapter Questions

Problem 7PA: Use the weighted-average (AVG) cost allocation method, with perpetual inventory updating, to...

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Similar questions

Black Corporation uses the LIFO cost flow assumption. Each unit of its inventory has a net realizable value of 300, a normal profit margin of 35, and a current replacement cost of 250. Determine the amount per unit that should be used as the market value to apply the lower of cost or market rule to determine Blacks ending inventory.
Calculate a) cost of goods sold, b) ending inventory, and c) gross margin for A76 Company, considering the following transactions under three different cost allocation methods and using perpetual inventory updating. Provide calculations for weighted average (AVG).
Calculate a) cost of goods sold, b) ending inventory, and c) gross margin for A76 Company, considering the following transactions under three different cost allocation methods and using perpetual inventory updating. Provide calculations for last-in, first-out (LIFO).
Use the first-in, first-out (FIFO) cost allocation method, with perpetual inventory updating, to calculate (a) sales revenue, (b) cost of goods sold, and c) gross margin for A75 Company, considering the following transactions.
Calculate a) cost of goods sold, b) ending inventory, and c) gross margin for A76 Company, considering the following transactions under three different cost allocation methods and using perpetual inventory updating. Provide calculations for first-in, first-out (FIFO).
Use the last-in, first-out method (LIFO) cost allocation method, with perpetual inventory updating, to calculate (a) sales revenue, (b) cost of goods sold, and c) gross margin for B75 Company, considering the following transactions.
Use the first-in, first-out method (FIFO) cost allocation method, with perpetual inventory updating, to calculate (a) sales revenue, (b) cost of goods sold, and c) gross margin for B75 Company, considering the following transactions.
Hoover Company purchased two identical inventory items. The item purchased first cost $41.00. The item purchased second cost $45.50. Then Hoover sold one of the inventory items for $60. Based on this information, which of the following statements is true? Multiple Choice The gross margin is $16.75 if Hoover uses the weighted-average cost flow method. The cost of goods sold is $41.00 if Hoover uses the LIFO cost flow method. The ending inventory is $45.50 if Hoover uses the LIFO cost flow method. The cost of goods sold is $45.50 if Hoover uses the FIFO cost flow method.
Ross Electronics has one product in its ending inventory. Per unit data consist of the following: cost, $20; selling price, $30; selling costs, $4. What unit value should Ross use when applying the lower of cost or net realizable value rule to ending inventory?
The Alpha Company uses the retail inventory method for valuation of its inventory. If an item had a cost of $45, was originally marked to sell at $60, was later priced at $55, and finally was priced at $68, the resulting price change is a a. net markup of $13. b. net markdown of $5 and a markup of $8. c. net markdown of zero and an a markup of $8. d. net markup of $23.
1.Calculate average-cost per unit. 2. From these data compute the ending inventory on each of the following bases. Assume that perpetual inventory records are kept in units only. (1) First-in, first-out (FIFO). (2) Last-in, first-out (LIFO). (3) Average-cost. 3. If the perpetual inventory record is kept in dollars, and costs are computed at the time of each withdrawal, would the amounts shown as ending inventory in (1), (2), and (3) above be the same? What amount would be shown as ending inventory? (1)FIFO (2)LIFO (3)Average-cost Would amount be same No/Yes? No/Yes? Yes/No? Ending Inventory $ $ $
Brooks company carries three inventory items. The following infromation pertains to the ending inventory: Item Quality Unit Cost Unit Market Value A 120 $60 $55 F 170 $80 $75 K 110 $30 $40 Determine the ending inventory that Brooks will report on the balance sheet, assumming that it applies to thelower cost of market rule to indiviual inventory items. Caculate the adjustments required under both methods, assuming the decline in value is immaterial.

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