E6-4 Elsa's Boards sells a snowboard, Xpert, that is popular with snowboard enthusiasts.Information relating to Elsa's purchases of Xpert snowboards during September is shownbelow. During the same month, 121 Xpert snowboards were sold. Elsa's uses a periodicinventory system.DateExplanationUnitsUnit CostTotal CostSept. 1Sept. 12Sept. 19Sept. 26$ 2,5224,5902,0805,250$ 97InventoryPurchases2645102PurchasesPurchases2010450105Totals141$14,442Instructions(a) Compute the ending inventory at September 30 and cost of goods sold using the FIFOand LIFO methods. Prove the amount allocated to cost of goods sold under each method.(b) For both FIFO and LIFO, calculate the sum of ending inventory and cost of goods sold.What do you notice about the answers you found for each method?

Using FIFO method, older units are sold first and under LIFO method, newer units are sold first.

E6-4 Elsa's Boards sells a snowboard, Xpert, that is popular with snowboard enthusiasts. Information relating to Elsa's purchases of Xpert snowboards during September is shown below. During the same month, 121 Xpert snowboards were sold. Elsa's uses a periodic inventory system. Explanation Inventory Purchases Purchases Purchases Date Units Unit Cost Total Cost $ 97 Sept. 1 Sept. 12 Sept. 19 Sept. 26 $ 2,522 4,590 2,080 5,250 26 45 102 20 104 50 105 Totals 141 $14,442 Instructions (a) Compute the ending inventory at September 30 and cost of goods sold using the FIFO and LIFO methods. Prove the amount allocated to cost of goods sold under each method. (b) For both FIFO and LIFO, calculate the sum of ending inventory and cost of goods sold. What do you notice about the answers you found for each method?

E6-4 Elsa's Boards sells a snowboard, Xpert, that is popular with snowboard enthusiasts. Information relating to Elsa's purchases of Xpert snowboards during September is shown below. During the same month, 121 Xpert snowboards were sold. Elsa's uses a periodic inventory system. Explanation Inventory Purchases Purchases Purchases Date Units Unit Cost Total Cost $ 97 Sept. 1 Sept. 12 Sept. 19 Sept. 26 $ 2,522 4,590 2,080 5,250 26 45 102 20 104 50 105 Totals 141 $14,442 Instructions (a) Compute the ending inventory at September 30 and cost of goods sold using the FIFO and LIFO methods. Prove the amount allocated to cost of goods sold under each method. (b) For both FIFO and LIFO, calculate the sum of ending inventory and cost of goods sold. What do you notice about the answers you found for each method?

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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Which one of the following is violated when a firm has a policy of accelerating the recognition of depreciation expense during good years and decreasing depreciation expense during lean years? Relevance Matching Consistency Conservatism
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Ex. Clear Sound Audio uses a periodic inventory system. One of the store's most popular products is an MP8 car stereo system. The inventory quantities, purchases, and sales of this product for the most recent year are as follows. Inventory, Jan. 1 First purchase (May 12) Second purchase (July 9) Third purchase (Oct. 4) Fourth purchase (Dec. 18) Goods available for sale Units sold during the year Inventory, Dec. 31 Number of Units NG ER NG 73 22 Cost per Unit $299 306 308 315 320 Total Cost $ 3,588 4,590 6,468 2,520 5,440 $22,606 Instructions a. Using periodic costing procedures, compute the cost of the December 31 inventory and the cost of goods sold for the MPS systems during the year under each of the following cost flow assumptions. 1. First-in, first-out. 2. Last-in, first-out. 3. Average cost (round to nearest dollar, except unit cost, and ignore small total rounding difference).