24th Edition

ISBN: 9781259916960

Author: Wild, John J., Shaw, Ken W.

Publisher: Mcgraw-hill Education,

Concept explainers

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in…

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Textbook Question

Chapter 6, Problem 18E

Exercise 6-1E Perpetual inventory costing P1 Tree Seedlings has the following current-year purchases and sales for its only product.

Date		Activities	Units Acquired at Cost	Units Sold at Retail
Jan.	1	Beginning inventory.........	40 units @$2 = $ 80
Jan.	3	Sales.....................		30 units 0 $8
Feb.	14	Purchase..................	70 units i*13 = $210
Feb.	15	Sales.....................		60 units 0 $8
June	30	Purchase..................	90 units ift $4 = $360
Nov.	6	Sales.....................		86 units 0 $8
Nov.	19	Purchase..................	20 units (ft $5 = $100
		Totals ....................	220 units $750	176 units

Required

The company uses a perpetual inventory system. Determine the costs assigned to ending inventory and to cost of goods sold using (a) FEFO and (6) LEFO. (c) Compute the gross margin for each method.

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Chapter 6, Problem 17E

Chapter 6, Problem 19E

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Exercise 5-11 Perpetual: Inventory costing methods-FIFO and LIFO P1 Tree Seedlings has the following current year purchases and sales for its only product. Date Activities Units Acquired at Cost Units Sold at Retail Jan. 1 Jan. 3 Beginning inventory Sales.. 40 units @ $2 = $ 80 30 units @ $8 Feb. 14 Purchase 70 units @ $3 = $210 Feb. 15 Sales.. 60 units @ $8 June 30 Nov. 6 Purchase Sales... 90 units @ $4 = $360 86 units @ $8 Nov. 19 Purchase Totals 20 units @$5-$100 220 units $750 176 units Required The company uses a perpetual inventory system. Determine the costs assigned to ending inventory and to cost of goods sold using (a) FIFO and (b) LIFO. (c) Compute the gross profit for each method.

Exercise 5-3 Perpetual: Inventory costing methods P1 Laker Company reported the following January purchases and sales data for its only product. Date Activities Jan. 1 Jan. 10 Beginning inventory.... Sales Units Acquired at Cost 140 units @$6.00 $ 840 Units Sold at Retail 100 units @ $15 Jan. 20 Jan. 25 Purchase. Sales 60 units @ $5.00 = 300 80 units @ $15 Jan. 30 Purchase Totals 180 units @$4.50= 810 380 units $1,950 180 units Required The company uses a perpetual inventory system. Determine the cost assigned to ending inventory and to cost of goods sold using (a) specific identification, (b) weighted average, (c) FIFO, and (d) LIFO. (Round per unit costs and inventory amounts to cents.) For specific identification, ending inventory consists of 180 units from the January 30 purchase, 5 units from the January 20 purchase, and 15 units from beginning inventory.

QS 6-5 Perpetual: Inventory costing with LIFO LO P1 A company reports the following beginning inventory and two purchases for the month of January. On Januery 26, the company sells 310 units. Ending inventory at January 31 totals 130 units. Beginning inventory on January 1 Purchane on January Purchase on January 25 Units 280 60 Unit Cost $2.60 2.80 100 2.94 Required: Assume the perpetual inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on LIFO. Perpetual LIFO: Goods purchased Cost of Goods Sold Inventery Balance #of units Cost per unit of units sold Cost per Cost of Goods unit Date of units Cost per unit Inventory Balance Sold January 1 January January 25

Chapter 6 Solutions

Fundamental Accounting Principles

Ch. 6 - Prob. 1DQ Ch. 6 - Where is the amount of merchandise inventory...Ch. 6 - If costs are declining, will the LIFO or FIFO...Ch. 6 - Prob. 4DQ Ch. 6 - Prob. 5DQ Ch. 6 - Prob. 6DQ Ch. 6 - Prob. 7DQ Ch. 6 - Prob. 8DQ Ch. 6 - Prob. 9DQ Ch. 6 - Prob. 10DQ

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