Sh9 In October, Nicole of Nicole's Getaway Spa (NGS) eliminated all existing inventory of cosmetic items. The trouble of ordering and tracking each produline had exceeded the profits eamed. In December, a supplier asked her to sell a prepackaged spa kit. Feeling she could manage a single product lineNicole agreed. NGS would make monthly purchases from the supplier at a cost that included production costs and a transportation charge. The spawould use a perpetual inventory system to keep track of its new inventory.On December 31, NGS purchased 10 units at a total cost of $6.00 per unit. NGS purchased 30 more units at $8.00 in February, but returned 5.defective units to the supplier. In March, NGS purchased 15 units at $10.00 per unit. In May, 50 units were purchased at $10.00 per unit; howevertook advantage of a 2.00/10, n/30 discount from the supplier. In June, NGS sold 50 units at a selling price of $12.60 per unit and 35 units at $10.60 peunit.Required:1. State whether the transportation cost included in each purchase should be recorded as a cost of the inventory or immediately expensed.OImmediately expensedO Inventory cost2. Compute the Cost of Goods Available for Sale, Cost of Goods Sold, and Cost of Ending Inventory using the first-in, first-out (FIFO) method. (Do notround intermediate calculations. Round final answers to the nearest dollar amount.)Chart onCost of goods available for saleCost of goods soldCost of ending inventory.3-a. Calculate the inventory turnover ratio, using the inventory on hand at December 31 as the beginning inventory. (Do not round intermediatecalculations. Round your answer to 1 decimal place.)Inventory turnover ratiotimes3-b. The supplier reported that the typical inventory turnover ratio was 7.9. How does NGS's ratio compare?This implies that it is taking Nicole a slightlyamount of time to sell her inventory than her supplier claims is typical.

It has been given in the question that a FIFO method has been used by the company for the valuation…

Required: 1. State whether the transportation cost included in each purchase should be recorded as a cost of the inventory or immediately expensed. Immediately expensed OInventory cost 2. Compute the Cost of Goods Available for Sale, Cost of Goods Sold, and Cost of Ending Inventory using the first-in, first-out (FIFO) method. (Do not round intermediate calculations. Round final answers to the nearest dollar amount.) Chat on Cost of goods available for sale. Cost of goods sold Cost of ending inventory 3-a. Calculate the inventory turnover ratio, using the inventory on hand at December 31 as the beginning inventory. (Do not round intermediate. calculations. Round your answer to 1 decimal place.) Inventory turnover ratio times 3-b. The supplier reported that the typical inventory turnover ratio was 7.9. How does NGS's ratio compare? This implies that it is taking Nicole a slightly amount of time to sell her inventory than her supplier claims is typical.

Required: 1. State whether the transportation cost included in each purchase should be recorded as a cost of the inventory or immediately expensed. Immediately expensed OInventory cost 2. Compute the Cost of Goods Available for Sale, Cost of Goods Sold, and Cost of Ending Inventory using the first-in, first-out (FIFO) method. (Do not round intermediate calculations. Round final answers to the nearest dollar amount.) Chat on Cost of goods available for sale. Cost of goods sold Cost of ending inventory 3-a. Calculate the inventory turnover ratio, using the inventory on hand at December 31 as the beginning inventory. (Do not round intermediate. calculations. Round your answer to 1 decimal place.) Inventory turnover ratio times 3-b. The supplier reported that the typical inventory turnover ratio was 7.9. How does NGS's ratio compare? This implies that it is taking Nicole a slightly amount of time to sell her inventory than her supplier claims is typical.

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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