Soler Company uses the periodic method to account for inventory. At the beginning of the year, Soler had 300 units of inventory that cost $45 (you need to include this inventory in your count when answering the questions below). Soler had the following inventory purchases throughout the period: First 250 units @ $50 = $12,500 Second 430 units @ $52 = $22,360 Third 325 units @ $55 = $17,875 Fourth 205 units @ $57 = $11,685 Throughout the year, Soler sold 1,025 units for $120 per unit. Using the information above, complete the following: 1. Assume that Soler uses the FIFO method to account for inventory and the current Net Realizable Value for the inventory is $25,100. At what amount would Soler report this inventory on its Balance Sheet, assuming that they elect to report at the Lower of Cost or Net Realizable Value? (To solve for this, compare ending inventory under FIFO to the Net Realizable Value). Assume that Soler uses the FIFO method to account for inventory. Using the beginning inventory (45 units X $300 per unit), the FIFO ending inventory and COGS calculated in part 4 of this question, what is Soler’s Inventory Turnover? What is Soler’s Days in Inventory? Be sure to show your calculations. Assume that the industry average for Inventory Turnover is 5.6. Is Soler doing a better or worse job of managing its inventory? What are some of the problems a company can have if they do not properly manage their inventory? What can they do to improve their inventory management?

Name: Soler Company uses the periodic method to account for inventory. At th
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Description: Soler Company uses the periodic method to account for inventory. At the beginning of the year, Soler had 300 units of inventory that cost $45 (you need to include this inventory in your count when answering the questions below). Soler had the followi

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Soler Company uses the periodic method to account for inventory. At the beginning of the year, Soler had 300 units of inventory that cost $45 (you need to include this inventory in your count when answering the questions below).

Soler had the following inventory purchases throughout the period:

First	250	units	@	$50	=	$12,500

Second	430	units	@	$52	=	$22,360

Third	325	units	@	$55	=	$17,875

Fourth	205	units	@	$57	=	$11,685

Throughout the year, Soler sold 1,025 units for $120 per unit.

Using the information above, complete the following:

1. Assume that Soler uses the FIFO method to account for inventory and the current Net Realizable Value for the inventory is $25,100. At what amount would Soler report this inventory on its Balance Sheet, assuming that they elect to report at the Lower of Cost or Net Realizable Value? (To solve for this, compare ending inventory under FIFO to the Net Realizable Value).

Assume that Soler uses the FIFO method to account for inventory. Using the beginning inventory (45 units X $300 per unit), the FIFO ending inventory and COGS calculated in part 4 of this question, what is Soler’s Inventory Turnover? What is Soler’s Days in Inventory? Be sure to show your calculations.
Assume that the industry average for Inventory Turnover is 5.6. Is Soler doing a better or worse job of managing its inventory? What are some of the problems a company can have if they do not properly manage their inventory? What can they do to improve their inventory management?

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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