XYZ Co uses the periodic inventory system to account for inventories. Its beginning inventory is 500 units at 5 $ each. Information related to XYZ Company's inventory at October 31 is given below: Alpha CO Date Explanation Units Units Cost Total Cost 10/01 Opening balance 500 $ 5 $ 2500 10/08 Purchase 800 $ 11 $ 8800 10/15 Purchase 600 $ 14 $ 8400 10/20 Purchase 300 $ 15 $ 4500 Total goods available 2200 $ 24200 During the year, 1400 units were sold. Method Ending Inventory COGS FIFO 11,500 12,700 LIFO 5,800 18,400 Average 8,800 15,400 Required: XYZ wants to increase its capital by equity offering up to 70 % and the 30% by bank loan. Which valuation method of inventory the company should use. Explain:
XYZ Co uses the periodic inventory system to account for inventories. Its beginning inventory is 500 units at 5 $ each. Information related to XYZ Company's inventory at October 31 is given below: Alpha CO Date Explanation Units Units Cost Total Cost 10/01 Opening balance 500 $ 5 $ 2500 10/08 Purchase 800 $ 11 $ 8800 10/15 Purchase 600 $ 14 $ 8400 10/20 Purchase 300 $ 15 $ 4500 Total goods available 2200 $ 24200 During the year, 1400 units were sold. Method Ending Inventory COGS FIFO 11,500 12,700 LIFO 5,800 18,400 Average 8,800 15,400 Required: XYZ wants to increase its capital by equity offering up to 70 % and the 30% by bank loan. Which valuation method of inventory the company should use. Explain:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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XYZ Co uses the periodic inventory system to account for inventories. Its beginning inventory is 500 units at 5 $ each. Information related to XYZ Company's inventory at October 31 is given below:
|
Alpha CO |
||||
|
Date |
Explanation |
Units |
Units Cost |
Total Cost |
|
10/01 |
Opening balance |
500 |
$ 5 |
$ 2500 |
|
10/08 |
Purchase |
800 |
$ 11 |
$ 8800 |
|
10/15 |
Purchase |
600 |
$ 14 |
$ 8400 |
|
10/20 |
Purchase |
300 |
$ 15 |
$ 4500 |
|
|
Total goods available |
2200 |
|
$ 24200 |
|
During the year, 1400 units were sold. |
| Method | Ending Inventory | COGS |
| FIFO | 11,500 | 12,700 |
| LIFO | 5,800 | 18,400 |
| Average | 8,800 | 15,400 |
Required:
XYZ wants to increase its capital by equity offering up to 70 % and the 30% by bank loan. Which
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