Loose Leaf for Financial Accounting: Information for Decisions
Loose Leaf for Financial Accounting: Information for Decisions
9th Edition
ISBN: 9781260158762
Author: John J Wild
Publisher: McGraw-Hill Education
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Chapter 5, Problem 4PSB

1.

Summary Introduction

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.

1.

Expert Solution
Check Mark

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 costTotal cost
    1st MayOpening inventory15030045000
    6th MayPurchase 350350122500
    17th MayPurchase8045036000
    25th May purchase10045845800
    Total680249,300

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.

Summary Introduction

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.

Expert Solution
Check Mark

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:

  Closing Units= Opening Units+ Units purchased - units sold=150+(350+80+100)-(180+300)= 200 units

The number of units in ending inventory is 200 units

3.

Summary Introduction

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.

Expert Solution
Check Mark

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

  1. Cost assigned under FIFO method:
  2.   Loose Leaf for Financial Accounting: Information for Decisions, Chapter 5, Problem 4PSB , additional homework tip  1

    Thus the cost assigned to ending inventory under FIFO method is $88800.

  3. LIFO method:

  Loose Leaf for Financial Accounting: Information for Decisions, Chapter 5, Problem 4PSB , additional homework tip  2

Thus the cost assigned to ending inventory under LIFO method is $62500.

  1. Calculating the assigned amount of ending inventory according to weighted average method:
    • DateParticularUnitCost per unitTotalBalance inventory
      UnitsCost per unitTotal cost
      1st MayOpening balance1503004500015030045000
      6th mayPurchase350350122500500335167500
      9th maySales18033560300320335107200
      17th may Purchase804503600400358143200
      25th mayPurchase10045845800500378189000
      30th maySales30037811340020037875600

    Thus, cost assigned to ending inventory using weighted average method is $75600

  2. Cost assigned to total inventory using specific identification method:
  3. Using specific identification method closing inventory will consist

      ParticularUnitsPer unit ($)Amount ($)
      Opening Inventory7030021000
      6th May5035017500
      17th May8045036000
      Total$74,500

    Thus, cost assigned to ending inventory using specific identification method is $$74,500

4.

Summary Introduction

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.

Expert Solution
Check Mark

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:

  Cost of goods sold= Cost of goods available for sales- ending inventory

For FIFO method

  Cost of goods sold= Cost of goods available for sales- ending inventory= 249,30088800=$160500

For LIFO methods

  Cost of goods sold= Cost of goods available for sales- ending inventory= 249,30062500=$186800

For weighted average method:

  Cost of goods sold= Cost of goods available for sales- ending inventory= 249,300$75600=$173700

For specific identification:

  Cost of goods sold= Cost of goods available for sales- ending inventory= 249,30074,500=$174,800

    ParticularFIFO methodLIFO methodWeighted average methodSpecific 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.

Summary Introduction

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.

Expert Solution
Check Mark

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.

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Chapter 5 Solutions

Loose Leaf for Financial Accounting: Information for Decisions

Ch. 5 - Prob. 11DQCh. 5 - Refer to Samsung’s financial statements in...Ch. 5 - Prob. 1QSCh. 5 - Prob. 2QSCh. 5 - Prob. 3QSCh. 5 - Prob. 4QSCh. 5 - Prob. 6QSCh. 5 - Prob. 7QSCh. 5 - Prob. 8QSCh. 5 - Prob. 9QSCh. 5 - Prob. 10QSCh. 5 - Prob. 11QSCh. 5 - Refer to the information in QS 5-10 and assume the...Ch. 5 - Prob. 13QSCh. 5 - Prob. 14QSCh. 5 - Prob. 15QSCh. 5 - Prob. 16QSCh. 5 - Prob. 17QSCh. 5 - Identify the inventory costing method best...Ch. 5 - Prob. 19QSCh. 5 - In taking a physical inventory at the end of the...Ch. 5 - Prob. 21QSCh. 5 - Confucious Bookstore’s inventory is destroyed by a...Ch. 5 - Answer each of the following questions related to...Ch. 5 - Prob. 24QSCh. 5 - Prob. 1ECh. 5 - Prob. 2ECh. 5 - Laker Company reported following January purchases...Ch. 5 - Prob. 7ECh. 5 - Prob. 8ECh. 5 - Prob. 9ECh. 5 - Prob. 10ECh. 5 - Prob. 11ECh. 5 - Prob. 12ECh. 5 - Prob. 13ECh. 5 - Prob. 14ECh. 5 - Prob. 15ECh. 5 - Prob. 16ECh. 5 - Prob. 17ECh. 5 - Tree seedlins has the following current-year...Ch. 5 - Prob. 1PSACh. 5 - Prob. 2PSACh. 5 - Prob. 3PSACh. 5 - Prob. 5PSACh. 5 - Prob. 6PSACh. 5 - Prob. 7PSACh. 5 - QP Corp. sold 4,000 units of its product at $50...Ch. 5 - Prob. 9PSACh. 5 - Prob. 10PSACh. 5 - Prob. 1PSBCh. 5 - Prob. 2PSBCh. 5 - Prob. 3PSBCh. 5 - Prob. 4PSBCh. 5 - Prob. 5PSBCh. 5 - Hallam Company’s financial statements show the...Ch. 5 - Prob. 7PSBCh. 5 - Shepard Company sold 4,000 units of its product at...Ch. 5 - Prob. 9PSBCh. 5 - Prob. 10PSBCh. 5 - Santana Rey of Business solutions is evaluating...Ch. 5 - Prob. 5.2SPCh. 5 - Prob. 1FSACh. 5 - Prob. 2FSACh. 5 - Prob. 3FSACh. 5 - Golf Challenge Corp. is a retail sports store...Ch. 5 - Prob. 2BTNCh. 5 - Prob. 5BTN
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