The cost of Coke was increasing in the month of December 20X1. Based onyour computation in (b) and (c) above, identify and explain how this wouldimpact the ending inventory valuation and cost of goods sold under each of thedifferent cost flow assumptions: (i) FIFO method, (ii) weighted average methodand (iii) LIFO method, relative to the others. In other words, which cost flowassumption will result in the highest ending inventory valuation on the balancesheet and the lowest cost of goods sold on the income statement? DateDec 1Dec 7Dec 15Dec 20Dec 25EventBeginning InventoryPurchased in cashSoldPurchased in cashSoldUnitsmillions)1,500400(1,355)1,200(865)(in Unit Cost@$0.50 each@$0.53 each@$0.55 eachA stock take conducted on the night of 31 December 20X1 indicated that there are 880million cans of Coke left in the stock. Suppose the company uses a periodic inventorysystem and uses FRS 2 Inventories when accounting for its inventories. The companyalso uses the "allowance method" for allowance for accounts receivables impairmentunder FRS 109 Financial Instruments.

The inventory valuation methods value the inventory on different basis like FIFO, LIFO and weighted…

Answered: he cost of Coke was increasing in the…

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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The cost of Coke was increasing in the month of December 20X1. Based on
your computation in (b) and (c) above, identify and explain how this would
impact the ending inventory valuation and cost of goods sold under each of the
different cost flow assumptions: (i) FIFO method, (ii) weighted average method
and (iii) LIFO method, relative to the others. In other words, which cost flow
assumption will result in the highest ending inventory valuation on the balance
sheet and the lowest cost of goods sold on the income statement?

Date
Dec 1
Dec 7
Dec 15
Dec 20
Dec 25
Event
Beginning Inventory
Purchased in cash
Sold
Purchased in cash
Sold
Units
millions)
1,500
400
(1,355)
1,200
(865)
(in Unit Cost
@$0.50 each
@$0.53 each
@$0.55 each
A stock take conducted on the night of 31 December 20X1 indicated that there are 880
million cans of Coke left in the stock. Suppose the company uses a periodic inventory
system and uses FRS 2 Inventories when accounting for its inventories. The company
also uses the "allowance method" for allowance for accounts receivables impairment
under FRS 109 Financial Instruments.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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