**PR 6-5A: Periodic Inventory by Three Methods**Dymac Appliances uses the periodic inventory system. Details regarding the inventory of appliances at January 1, purchases invoices during the next 12 months, and the inventory count at December 31 are summarized as follows:| Model | Inventory, January 1 | Purchases Invoices | Inventory Count, December 31 ||-------|----------------------|--------------------|------------------------------|| | | 1st | 2nd | 3rd | || A10 | — | 4 at $64 | 4 at $70 | 4 at $76 | 6 || B15 | 8 at $176 | 4 at $158| 3 at $170| 6 at $184| 8 || E60 | 3 at $75 | 3 at $65 | 15 at $68| 9 at $70 | 5 || G83 | 7 at $242 | 6 at $250| 5 at $260| 10 at $259| 9 || J34 | 12 at $240 | 10 at $246| 16 at $267| 16 at $270 | 15 || M90 | 2 at $108 | 2 at $110| 3 at $128| 3 at $130| 5 || Q70 | 5 at $160 | 4 at $170| 4 at $175| 7 at $180| 8 |**Explanation:**The table provides an overview of inventory management for Dymac Appliances, indicating initial stock levels, purchase records, and year-end inventory counts for various models. The first column lists the model names. - "Inventory, January 1" shows the initial quantity and cost per unit.- "Purchases Invoices" are divided into three periods, providing the quantity and cost per unit for each purchase.- "Inventory Count, December 31" indicates the quantity remaining at the end of the year. **Instructions**1. **Determine the cost of the inventory on December 31 by the first-in, first-out (FIFO) method.** Present data in columnar form, using the following headings: - Model - Quantity - Unit Cost - Total Cost If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase.2. **Determine the cost of the inventory on December 31 by the last-in, first-out (LIFO) method**, following the procedures indicated in (1).3. **Determine the cost of the inventory on December 31 by the weighted average cost method**, using the columnar headings indicated in (1).4. **Discuss which method (FIFO or LIFO) would be preferred for income tax purposes in periods of (a) rising prices and (b) declining prices.**

Dymac Appliances Cost of inventory - FIFO method Model Qty Unit Cost Total Cost A10 4 $ 76 $…

Instructions 1. Determine the cost of the inventory on December 31 by the first-in, first-out method. Present data in columnar form, using the following headings: Quantity Unit Cost Model Total Cost If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase. 2. Determine the cost of the inventory on December 31 by the last-in, first-out method, following the procedures indicated in (1). 3. Determine the cost of the inventory on December 31 by the weighted average cost method, using the columnar headings indicated in (1). 4. Discuss which method (FIFO or LIFO) would be preferred for income tax purposes in periods of (a) rising prices and (b) declining prices.

Instructions 1. Determine the cost of the inventory on December 31 by the first-in, first-out method. Present data in columnar form, using the following headings: Quantity Unit Cost Model Total Cost If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase. 2. Determine the cost of the inventory on December 31 by the last-in, first-out method, following the procedures indicated in (1). 3. Determine the cost of the inventory on December 31 by the weighted average cost method, using the columnar headings indicated in (1). 4. Discuss which method (FIFO or LIFO) would be preferred for income tax purposes in periods of (a) rising prices and (b) declining prices.

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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