Pappa's Appliances uses the periodic inventory system. Details regarding the inventory of appliances at January 1, purchases invoices during the year, and the inventory count at December 31 are summarized as follows: Purchases Invoices Inventory Count, December 31 Inventory, January 1 Model 2nd 3rd 1st 3 at $1,040 3 at $1,054 7 at 3 at $1,060 3 at $1,070 C55 4 9 at 5 at 675 D11 639 645 6 at 666 6 at 11 1 at 260 1 at F32 240 3 at 260 280 3 at Н29 Зat 316 4 at 6 at 305 310 317 4 6 at 8 at K47 520 531 4 at 549 6 at 542 8. 4 at 232 S33 4 at 222 6 at 8 at X74 37 7 at 4 at 35 36 39 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: 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 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). Discuss which method (FIFO or LIFO) would be preferred for income tax 4. purposes in periods of (a) rising prices and (b) declining prices.
Pappa's Appliances uses the periodic inventory system. Details regarding the inventory of appliances at January 1, purchases invoices during the year, and the inventory count at December 31 are summarized as follows: Purchases Invoices Inventory Count, December 31 Inventory, January 1 Model 2nd 3rd 1st 3 at $1,040 3 at $1,054 7 at 3 at $1,060 3 at $1,070 C55 4 9 at 5 at 675 D11 639 645 6 at 666 6 at 11 1 at 260 1 at F32 240 3 at 260 280 3 at Н29 Зat 316 4 at 6 at 305 310 317 4 6 at 8 at K47 520 531 4 at 549 6 at 542 8. 4 at 232 S33 4 at 222 6 at 8 at X74 37 7 at 4 at 35 36 39 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: 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 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). Discuss which method (FIFO or LIFO) would be preferred for income tax 4. purposes in periods of (a) rising prices and (b) declining prices.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Pappa's Appliances uses the periodic inventory system. Details regarding the inventory
of appliances at January 1, purchases invoices during the year, and the inventory count
at December 31 are summarized as follows:
Purchases Invoices
Inventory Count,
December 31
Inventory,
January 1
Model
2nd
3rd
1st
3 at $1,040
3 at $1,054
7 at
3 at $1,060
3 at $1,070
C55
4
9 at
5 at
675
D11
639
645
6 at
666 6 at
11
1 at
260 1 at
F32
240
3 at
260
280
3 at
Н29
Зat
316 4 at
6 at
305
310
317
4
6 at
8 at
K47
520
531
4 at
549 6 at
542
8.
4 at
232
S33
4 at
222
6 at
8 at
X74
37 7 at
4 at
35
36
39
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:
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 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).
Discuss which method (FIFO or LIFO) would be preferred for income tax
4.
purposes in periods of (a) rising prices and (b) declining prices.
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