Concept explainers
1.
Introduction:
Inventory is a record of finished goods of a company which they can sell to the customer, work in progress which can be transformed into finish goods and raw material which is a means of production. Inventory is also classified as a current asset in the
To calculate: Cost assigned to ending inventory and cost of goods sold using FIFO method.
1.

Answer to Problem 4PSB
Cost of goods available for is $249,300 and number of units available for sale is 680
Explanation of Solution
Cost of goods available for sale and number of units available for sale is as follows:
Date | Particular | Units | Per unit cost | Total cost |
1st May | Opening inventory | 150 | 300 | 45000 |
6th May | Purchase | 350 | 350 | 122500 |
17th May | Purchase | 80 | 450 | 36000 |
25th May | purchase | 100 | 458 | 45800 |
Total | 680 | 249,300 |
Thus, cost of goods available for is $249,300 and number of units available for sale is 680
Thus the cost assigned to ending inventory under FIFO method is $88800.
2.
Introduction:
Inventory is a record of finished goods of a company which they can sell to the customer, work in progress which can be transformed into finish goods and raw material which is a means of production. Inventory is also classified as a current asset in the balance sheet and it is valued by FIFO LIFO and weighted average method.
To calculate: Cost assigned to ending inventory and cost of goods sold using FIFO method.
2.

Answer to Problem 4PSB
The number of units in ending inventory is 200 units
Explanation of Solution
The number of units in closing inventory is as follows:
The number of units in ending inventory is 200 units
3.
Introduction:
Inventory is a record of finished goods of a company which they can sell to the customer, work in progress which can be transformed into finish goods and raw material which is a means of production. Inventory is also classified as a current asset in the balance sheet and it is valued by FIFO LIFO and weighted average method.
To compute: Cost assigned to ending inventory and cost of goods sold using LIFO method.
3.

Answer to Problem 4PSB
Cost assigned to ending inventory under FIFO method is $88800, under LIFO method is $62500, using weighted average method is $75600, using specific identification method is $$74,500
Explanation of Solution
- Cost assigned under FIFO method:
- LIFO method:
Thus the cost assigned to ending inventory under FIFO method is $88800.
Thus the cost assigned to ending inventory under LIFO method is $62500.
- Calculating the assigned amount of ending inventory according to weighted average method:
- Cost assigned to total inventory using specific identification method:
Date | Particular | Unit | Cost per unit | Total | Balance inventory | ||
Units | Cost per unit | Total cost | |||||
1st May | Opening balance | 150 | 300 | 45000 | 150 | 300 | 45000 |
6th may | Purchase | 350 | 350 | 122500 | 500 | 335 | 167500 |
9th may | Sales | 180 | 335 | 60300 | 320 | 335 | 107200 |
17th may | Purchase | 80 | 450 | 3600 | 400 | 358 | 143200 |
25th may | Purchase | 100 | 458 | 45800 | 500 | 378 | 189000 |
30th may | Sales | 300 | 378 | 113400 | 200 | 378 | 75600 |
Thus, cost assigned to ending inventory using weighted average method is $75600
Using specific identification method closing inventory will consist
Particular | Units | Per unit ($) | Amount ($) |
Opening Inventory | 70 | 300 | 21000 |
6th May | 50 | 350 | 17500 |
17th May | 80 | 450 | 36000 |
Total | $74,500 |
Thus, cost assigned to ending inventory using specific identification method is $$74,500
4.
Introduction:
Inventory is a record of finished goods of a company which they can sell to the customer, work in progress which can be transformed into finish goods and raw material which is a means of production. Inventory is also classified as a current asset in the balance sheet and it is valued by FIFO LIFO and weighted average method.
To compute: The gross profit earn by the company is cost assigned to ending inventory for the company A using FIFO,LIFO and weighted average and specific identification.
4.

Answer to Problem 4PSB
Gross using FIFO methods is $636000 , using LIFO method is $449200, using weighted average method is $460024, and specific identification method is $461200.
Explanation of Solution
Gross profit earn by the company:
Cost of Goods sold:
For FIFO method
For LIFO methods
For weighted average method:
For specific identification:
Particular | FIFO method | LIFO method | Weighted average method | Specific identification method |
Total Sales | $636000 | $636000 | $636000 | $636000 |
Cost of goods sold | $160500 | $186800 | $173700 | $174800 |
Total | $475,500 | $449200 | $462300 | $461200 |
Thus, gross using FIFO methods is $636000 , using LIFO method is $449200, using the weighted average method is $460024, and specific identification method is $461200.
5.
Introduction:
Inventory is a record of finished goods of a company which they can sell to the customer, work in progress which can be transformed into finish goods and raw material which is a means of production. Inventory is also classified as a current asset in the balance sheet and it is valued by FIFO LIFO and weighted average method.
To compute: The gross profit earn by the company is cost assigned to ending inventory for the company A using FIFO,LIFO and weighted average and specific identification.
5.

Answer to Problem 4PSB
The manager will prefer FIFO method for costing inventory as gross profit is highest in FIFO method so using this method manager will earn more bonuses.
Explanation of Solution
FIFO method yield $475,500 gross profit which highest among other methods. So, the manager will prefer FIFO method for costing inventory as gross profit is highest in the FIFO method so using this method manager will earn more bonuses.
Want to see more full solutions like this?
Chapter 5 Solutions
FINANCIAL ACCT-CONNECT
- Consolidation after Several Years On January 1, 2016, Adams Corporation acquired all of the stock of Baker Company. The fair value of Adams’ shares used in the exchange was $37,500,000. At the time of acquisition, the book value of Baker’s shareholders’ equity was $5,000,000, and the book value of Baker’s building (25-year life) exceeded its fair value by $1,000,000. From the date of acquisition to December 31, 2021, Baker had cumulative net income of $1,300,000. For 2022, Baker reported net income of $300,000. Adams uses the complete equity method to account for its investment in Baker. There is no goodwill impairment loss for the period 2016 through 2021, but there is impairment loss of $100,000 in 2022. Baker declared no dividends during the period 2016–2022. Required Prepare the working paper eliminating entries necessary to consolidate the financial statements of Adams and Baker at December 31, 2022. Enter numerical answers using all zeros (do not abbreviate in thousands or in…arrow_forwardGive me the answer in a clear organized table please. Thank you!arrow_forwardGive me the answer in a clear organized table please. Thank you!arrow_forward
- Assess the role of the Conceptual Framework in financial reporting and its influence on accounting theory and practice. Discuss how the qualitative characteristics outlined in the Conceptual Framework enhance financial reporting and contribute to decision-usefulness. Provide examplesarrow_forwardCurrent Attempt in Progress Cullumber Corporation has income from continuing operations of $464,000 for the year ended December 31, 2025. It also has the following items (before considering income taxes). 1. An unrealized loss of $128,000 on available-for-sale securities. 2. A gain of $48,000 on the discontinuance of a division (comprised of a $16,000 loss from operations and a $64,000 gain on disposal). Assume all items are subject to income taxes at a 20% tax rate. Prepare a partial income statement, beginning with income from continuing operations. Income from Continuing Operations Discontinued Operations Loss from Operations Gain from Disposal Net Income/(Loss) CULLUMBER CORPORATION Income Statement (Partial) For the Year Ended December 31, 2025 Prepare a statement of comprehensive income. Net Income/(Loss) $ CULLUMBER CORPORATION Statement of Comprehensive Income For the Year Ended December 31, 2025 = Other Comprehensive Income Unrealized Loss of Available-for-Sale Securities ✰…arrow_forwardPlease make a trial balance, adjusted trial balance, Income statement. end balance ,owners equity statement, Balance sheet , Cash flow statement ,Cash end balancearrow_forward
- Activity Based Costing - practice problem Fontillas Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 300 pressure gauges were produced, and overhead costs of $89,500 were estimated. An analysis of estimated overhead costs reveals the following activities. Activities 1. Materials handling 2. Machine setups Cost Drivers Number of requisitions Number of setups Total cost $35,000 27,500 3. Quality inspections Number of inspections 27,000 $89.500 The cost driver volume for each product was as follows: Cost Drivers Instruments Gauge Total Number of requisitions 400 600 1,000 Number of setups 200 300 500 Number of inspections 200 400 600 Insructions (a) Determine the overhead rate for each activity. (b) Assign the manufacturing overhead costs for April to the two products using activity-based costing.arrow_forwardBodhi Company has three cost pools and two doggie products (leashes and collars). The activity cost pool of ordering has the cost drive of purchase orders. The activity cost pool of assembly has a cost driver of parts. The activity cost pool of supervising has the cost driver of labor hours. The accumulated data relative to those cost drivers is as follows: Expected Use of Estimated Cost Drivers by Product Cost Drivers Overhead Leashes Collars Purchase orders $260,000 70,000 60,000 Parts 400,000 300,000 500,000 Labor hours 300,000 15,000 10,000 $960,000 Instructions: (a) Compute the activity-based overhead rates. (b) Compute the costs assigned to leashes and collars for each activity cost pool. (c) Compute the total costs assigned to each product.arrow_forwardTorre Corporation incurred the following transactions. 1. Purchased raw materials on account $46,300. 2. Raw Materials of $36,000 were requisitioned to the factory. An analysis of the materials requisition slips indicated that $6,800 was classified as indirect materials. 3. Factory labor costs incurred were $55,900, of which $51,000 pertained to factory wages payable and $4,900 pertained to employer payroll taxes payable. 4. Time tickets indicated that $50,000 was direct labor and $5,900 was indirect labor. 5. Overhead costs incurred on account were $80,500. 6. Manufacturing overhead was applied at the rate of 150% of direct labor cost. 7. Goods costing $88,000 were completed and transferred to finished goods. 8. Finished goods costing $75,000 to manufacture were sold on account for $103,000. Instructions Journalize the transactions.arrow_forward
- Chapter 15 Assignment of direct materials, direct labor and manufacturing overhead Stine Company uses a job order cost system. During May, a summary of source documents reveals the following. Job Number Materials Requisition Slips Labor Time Tickets 429 430 $2,500 3,500 $1,900 3,000 431 4,400 $10,400 7,600 $12,500 General use 800 1,200 $11,200 $13,700 Stine Company applies manufacturing overhead to jobs at an overhead rate of 60% of direct labor cost. Instructions Prepare summary journal entries to record (i) the requisition slips, (ii) the time tickets, (iii) the assignment of manufacturing overhead to jobs,arrow_forwardSolve accarrow_forwardSolve fastarrow_forward
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeCornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
- Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningCollege Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub




