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Mojo Industries tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the time of each sale, as if it uses a perpetual inventory system. Assume its accounting records provided the following information at the end of the accounting period, January 31. The inventory's selling price is $9 per unit. Transactions Inventory, January 1 Sale, January 10 Purchase, January 12 Sale, January 17 Purchase, January 26 Unit Cost $2.50 Ending Inventory Cost of Goods Sold 3.00 4.00 Units 360 (280) 420 (230) 120 O Lower Cost of Goods Sold O Higher Cost of Goods Sold Total Cost $ 900 1,260 Required: 1-a. Calculate the cost of goods sold and ending inventory for Mojo Industries assuming it applies the LIFO cost method perpetually at the time of each sale. 480 1-b. Does the use of a perpetual inventory system result in a higher or lower cost of goods sold than the periodic inventory system when costs are rising?

Mojo Industries tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the time of each sale, as if it uses a perpetual inventory system. Assume its accounting records provided the following information at the end of the accounting period, January 31. The inventory's selling price is $9 per unit. Transactions Inventory, January 1 Sale, January 10 Purchase, January 12 Sale, January 17 Purchase, January 26 Unit Cost $2.50 Ending Inventory Cost of Goods Sold 3.00 4.00 Units 360 (280) 420 (230) 120 O Lower Cost of Goods Sold O Higher Cost of Goods Sold Total Cost $ 900 1,260 Required: 1-a. Calculate the cost of goods sold and ending inventory for Mojo Industries assuming it applies the LIFO cost method perpetually at the time of each sale. 480 1-b. Does the use of a perpetual inventory system result in a higher or lower cost of goods sold than the periodic inventory system when costs are rising?

FINANCIAL ACCOUNTING
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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Mojo Industries tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the time of each sale, as if it uses a perpetual inventory system. Assume its accounting records provided the following information at the end of the accounting period, January 31. The inventory's selling price is $9 per unit. Transactions Inventory, January 1 Sale, January 10 Purchase, January 12 Sale, January 17 Purchase, January 26 Unit Cost $2.50 Ending Inventory Cost of Goods Sold 3.00 4.00 Units 360 (280) 420 (230) 120 Lower Cost of Goods Sold O Higher Cost of Goods Sold Total Cost $ 900 1,260 Required: 1-a. Calculate the cost of goods sold and ending inventory for Mojo Industries assuming it applies the LIFO cost method perpetually at the time of each sale. 480 1-b. Does the use of a perpetual inventory system result in a higher or lower cost of goods sold than the periodic inventory system when costs are rising?
Transcribed Image Text:Mojo Industries tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the time of each sale, as if it uses a perpetual inventory system. Assume its accounting records provided the following information at the end of the accounting period, January 31. The inventory's selling price is $9 per unit. Transactions Inventory, January 1 Sale, January 10 Purchase, January 12 Sale, January 17 Purchase, January 26 Unit Cost $2.50 Ending Inventory Cost of Goods Sold 3.00 4.00 Units 360 (280) 420 (230) 120 Lower Cost of Goods Sold O Higher Cost of Goods Sold Total Cost $ 900 1,260 Required: 1-a. Calculate the cost of goods sold and ending inventory for Mojo Industries assuming it applies the LIFO cost method perpetually at the time of each sale. 480 1-b. Does the use of a perpetual inventory system result in a higher or lower cost of goods sold than the periodic inventory system when costs are rising?
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