Question 3 Tokyo Audio uses a periodic inventory system. One of the store's most popular products is an AB3 car stereo system. The inventory quantities, purchases, and sales of this product for the most recent year are as follows: Cost per unit $2,990 3,060 3,080 3,150 3,200 Number of Units Total cost Inventory, 1 January First purchase Second purchase Third purchase Fourth purchase $29,900 45,900 61,600 25,200 60,800 $223,400 10 15 20 8. 19 Goods available for sale 72 Units sold during the year Inventory, 31 December 51 21 Instructions a) Using periodic costing procedures, compute the cost of the 31 December inventory and the cost of goods sold for the AB3 systems during the year under each of the following cost flow assumptions: 1. First-in, first-out. 2. Weighted average cost (round to nearest dollar, except unit cost). b) Which inventory pricing methods provides the most realistic year-end valuation of ending inventory in light of the net realizable value (NRV) of the AB3 units? Does this same method also produce the most realistic measure of profit in light of the NRV of the AB3 systems when they are sold? Explain.

Question 3 Tokyo Audio uses a periodic inventory system. One of the store's most popular products is an AB3 car stereo system. The inventory quantities, purchases, and sales of this product for the most recent year are as follows: Cost per unit $2,990 3,060 3,080 3,150 3,200 Number of Units Total cost Inventory, 1 January First purchase Second purchase Third purchase Fourth purchase $29,900 45,900 61,600 25,200 60,800 $223,400 10 15 20 8. 19 Goods available for sale 72 Units sold during the year Inventory, 31 December 51 21 Instructions a) Using periodic costing procedures, compute the cost of the 31 December inventory and the cost of goods sold for the AB3 systems during the year under each of the following cost flow assumptions: 1. First-in, first-out. 2. Weighted average cost (round to nearest dollar, except unit cost). b) Which inventory pricing methods provides the most realistic year-end valuation of ending inventory in light of the net realizable value (NRV) of the AB3 units? Does this same method also produce the most realistic measure of profit in light of the NRV of the AB3 systems when they are sold? Explain.

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Description: Question 3Tokyo Audio uses a periodic inventory system. One of the store's most popular products is an AB3 carstereo system. The inventory quantities, purchases, and sales of this product for the most recent year areas follows:Number of UnitsTotal c

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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Required information Skip to question [The following information applies to the questions displayed below.]Sara's Boutique has the following transactions related to its top-selling Gucci purse for the month of October. Sara's Boutique uses a periodic inventory system. Date Transactions Units Unit Cost Total Cost October 1 Beginning inventory 6 $810 $4,860 October 4 Sale 4 October 10 Purchase 5 820 4,100 October 13 Sale 3 October 20 Purchase 4 830 3,320 October 28 Sale 7 October 30 Purchase 7 840 5,880 $18,160 4. Using weighted-average cost, calculate ending inventory and cost of goods sold at October 31. (Round your intermediate calculations to 4 decimal places and final answers to 2 decimal places.)
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Question 3 Use the following information for question 3 (i) and (ii). (i) Beacon Factory, Inc. uses a perpetual inventory system. The company's beginning inventory and purchases of a particular product during the month of May were as follows: Quantity Unit Cost ($) Beginning inventory (1 May) 32 5 Purchases (11 May.) 46 7.5 Purchase (25 May.) 28 6 On 24 May, Beacon Factory, Inc. sold 50 units of this product. The other units remained in inventory at 3 1 May. (i) Refer to the above data. Assuming that Beacon Factory uses the FIFO flow assumption, the ending inventory at 31 May is: A: $268. B: $295. C: $378. D: $405. (ii) Refer to the above data. Assuming that Beacon Factory uses the weighted average cost flow assumption, the cost of goods sold to be recorded at 24 May is: A: $323. B: $308. C: $273 D: $347.
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