P6-4B The management of Weigel Inc. asks your help in determıning the compal tive effects of the FIFO and LIFO inventory cost flow methods. For 2014 the accounting records show these data. $ 16,000 470,500 Inventory, January 1 (4,000 units) Cost of 105,000 units purchased Selling price of 100,000 units sold Operating expenses 900,000 185,000 Units purchased consisted of 35,000 units at $4.21 on March 20; 65,000 units at $4.60 on July 24; and 5,000 units at $4.83 on December 12. Income taxes are 30%. Instructions (a) Prepare compårative condensed income statements for 2014 under FIFO and LIFO. (Show computations of ending inventory.) (b) - (1) Which inventory cost flow method produces the most meaningful inventory amount for the balance sheet? Why? (2) Which inventory cost flow method produces the most meaningful net income? Why? (3) Which inventory cost flow method is most likely to approximate the actual physical flow of the goods? Why? (4) How much more cash will be available under LIFO than under FIFO? Why? (5) How much of the gross profit under FIFO is illusionary in comparison with the gross profit under LIFO? Answer the following questions for management in the form of a business letter.

P6-4B The management of Weigel Inc. asks your help in determıning the compal tive effects of the FIFO and LIFO inventory cost flow methods. For 2014 the accounting records show these data. $ 16,000 470,500 Inventory, January 1 (4,000 units) Cost of 105,000 units purchased Selling price of 100,000 units sold Operating expenses 900,000 185,000 Units purchased consisted of 35,000 units at $4.21 on March 20; 65,000 units at $4.60 on July 24; and 5,000 units at $4.83 on December 12. Income taxes are 30%. Instructions (a) Prepare compårative condensed income statements for 2014 under FIFO and LIFO. (Show computations of ending inventory.) (b) - (1) Which inventory cost flow method produces the most meaningful inventory amount for the balance sheet? Why? (2) Which inventory cost flow method produces the most meaningful net income? Why? (3) Which inventory cost flow method is most likely to approximate the actual physical flow of the goods? Why? (4) How much more cash will be available under LIFO than under FIFO? Why? (5) How much of the gross profit under FIFO is illusionary in comparison with the gross profit under LIFO? Answer the following questions for management in the form of a business letter.

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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As of 12-31-15, Acme Company has three different inventory items on hand. Data on the three items follows: Item Quantity on hand Unit cost (Acme uses LIFO) Replacement cost Normal profit Expected selling price Estimated disposal costs A 75 $405 $625 $750 $1,500 $100 B 24 $310 $300 $230 $400 $25 C 51 $775 $800 $300 $1,000 $250 Using the lower-of-cost-or-market approach applied on an individual-item basis, determine if Acme needs to make an entry to write her inventory down. If so, prepare the entry Acme should make
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What would be NUBD’s finished inventory cost at December 31, 2021 under the variable costing method? A. P 90,000 B. P 104,000 C. P 105,000 D. P 135,000
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Brief Exercise 6-7 (Algo) Calculate ending inventory and cost of goods sold using weighted-average cost (LO6-3) During the year, Wright Company sells 565 remote-control airplanes for $110 each. The company has the following inventory purchase transactions for the year. Date January 1 May 5 November 3 Weighted Average Cost Beginning Inventory Purchases: Transaction Beginning inventory Purchase Purchase Calculate ending inventory and cost of goods sold for the year, assuming the company uses weighted-average cost. (Round your average cost per unit to 4 decimal places.) May 5 November 3 Total Number of Unit Units Cost 60 $63 295 66 245 71 600 60 295 245 600 Cost of Goods Available for Sale Number Average Cost Cost of Goods Number of units per unit Available for of units Sale sold $ Total Cost $3,780 19,470 17,395 $40,645 3,780 19,470 17,395 $ 40,645 Cost of Goods Sold - Weighted Average Cost Average Cost Cost of Goods per Unit Sold Ending Inventory - Weighted Average Cost Number of units…
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A company that started trading on 1 January 2011 without any opening inventory sold 20,000 items on 31 March 2011 for $10 per item. Raw materials purchased: Items On 1* January 2011 at 8$ per item 12000 On 1* February 2011 at 7$ per item On 1* March 2011 at 7.5$ per item 9000 7000 Calculate Gross Profit by using FIFO, LIFO and AVCO methods and discuss impact on different methods on profit level of company. What can you advise to financial analyst based on your observation of this change on gross profit?
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Your answer is incorrect. Inventory data for Shamrock Company are reported as follows: Date Explanation Number of Units Unit Cost Total Cost June 1 Beginning inventory 370 $5 $1,850 CL Purchase 570 6 3,420 23 Purchase 470 7 Assume a sale of 610 units occurred on June 15 for a selling price of $8 and a sale of 530 units on June 27 for $9. On June 30, 270 units remain in inventory. Calculate the cost of ending inventory and cost of goods sold on June 30 under weighted average. (Round the weighted average cost per unit to 3 decimal places, eg. 5.271 and final answers to 2 decimal places, eg. 5,275.75.) Weighted Average Ending inventory $ 1,639.90 Cost of goods sold $ 6,924.80
13. Using the following information calculate the Cost of Goods Sold (COGS) and Ending Inventory (El) using the "FIFO Periodic/Perpetual" method. Beginning Inventory 2,400 units @$46 each Jan 5th Sold 2,000 units Jan 10th Purchased 4,000 units @, $50 Jan 15th Sold 3,500 units Jan 20th Purchased 2,000 units @$55 13. Using the facts from Problem #13, please calculate the COGS and El using the "LIFO Periodic" method. 13 Using the facts from Problem #13, please calculate the COGS and El using the "LIFO Perpetual" method. Note: This method requires a little more thought but is more in line with the actual events, in chronological order.