Pool Corporation Inc. reported in its recent annual report that the industry experienced some price deflation one year followed by more normalized price inflation of approximately 2 percent overall despite price deflation for certain chemical products. This suggests that in some years Pool's overall inventory costs rise, and in some years they fall. Furthermore, in many years, the costs of some inventory items rise while others fall. Assume that Pool has only two product items in its inventory this year. Purchase and sale information are presented below. Pool uses a perpetual inventory system. Transaction Beginning inventory Purchases, February 7 Sales, February 28 Purchases, March 16 Sales, April 28 Item A Item B FIFO Inventory Item A Unit Cost Cost of Sales Units 40 80 50 100 110 $6 8 Weighted-Average 9 Inventory Item B Unit Cost Units 40 80 70 100 Required: 1. Compute the cost of sales for each of the two items separately using the FIFO and weighted average cost inventory costing methods. (Do not round intermediate calculations.) 900 $6 5 3

Pool Corporation Inc. reported in its recent annual report that the industry experienced some price deflation one year followed by more normalized price inflation of approximately 2 percent overall despite price deflation for certain chemical products. This suggests that in some years Pool's overall inventory costs rise, and in some years they fall. Furthermore, in many years, the costs of some inventory items rise while others fall. Assume that Pool has only two product items in its inventory this year. Purchase and sale information are presented below. Pool uses a perpetual inventory system. Transaction Beginning inventory Purchases, February 7 Sales, February 28 Purchases, March 16 Sales, April 28 Item A Item B FIFO Inventory Item A Unit Cost Cost of Sales Units 40 80 50 100 110 $6 8 Weighted-Average 9 Inventory Item B Unit Cost Units 40 80 70 100 Required: 1. Compute the cost of sales for each of the two items separately using the FIFO and weighted average cost inventory costing methods. (Do not round intermediate calculations.) 900 $6 5 3

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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Question

Pool Corporation Inc. reported in its recent annual report that the industry experienced some price deflation one year followed by
more normalized price inflation of approximately 2 percent overall despite price deflation for certain chemical products. This suggests
that in some years Pool's overall inventory costs rise, and in some years they fall. Furthermore, in many years, the costs of some
inventory items rise while others fall. Assume that Pool has only two product items in its inventory this year. Purchase and sale
information are presented below. Pool uses a perpetual inventory system.
Transaction
Beginning inventory
Purchases, February 7
Sales, February 28
Purchases, March 16
Sales, April 28
Item A
Item B
FIFO
Inventory Item A
Unit Cost
Cost of Sales
Units
40
80
50
100
110
$6
8
Weighted-Average
99
Inventory Item B
Unit Cost
Required:
1. Compute the cost of sales for each of the two items separately using the FIFO and weighted average cost inventory costing
methods. (Do not round intermediate calculations.)
Units
40
80
70
100
90
$6
5
33
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