
Concept explainers
Periodic Inventory system is an inventory system in which an organization updates the closing inventory balances in general ledger when it conducts physical inventory count. All purchases are recorded in purchase account and when physical counting is done then balance is transferred to inventory account.
There are several methods of calculating the value of inventory in closing stock which are as below:
FIFO method (First In First Out) is the most using method of
LIFO method (Last In First Out) is the method in which the quantity which purchase in last before sale transaction will be sold first. In closing inventory the quantity will be counted from the beginning inventory and purchase thereafter.
Weighted Average method is the most commonly used method after FIFO method. In weighted average the quantity of all purchases and beginning inventory is clubbed and then a weighted average rate is calculated and closing inventory is valued at weighted average rate.
Specific Identification method is the method in which the quantity is specifically identified that from which lot or purchases the closing stock is available and the closing inventory is valued by taking rates and quantities of that specific lot(s) from which closing inventory is available.
Under periodic method only at closing the inventory valuation is done and cost of goods is calculated as below:
Requirement-1
To Calculate:
In the given question we have to calculate the following details under periodic inventory system from the problem 6-3B:
- Cost of goods and quantity available for sale
Requirement-2
To calculate:
We have to calculate units in closing stock at month end.
Requirement-3:
To calculate:
We have to calculate cost of closing inventory using FIFO, LIFO, Weighted Average and Specific Identification method under periodic inventory system.
Requirement-4
To calculate:
We have to calculate gross profit under FIFO, LIFO, Weighted Average and Specific Identification method under periodic inventory system
Requirement-5:
To determine:
We have to determine that manager will prefer valuation method as it earns on percentage of gross profit.

Want to see the full answer?
Check out a sample textbook solution
Chapter 6 Solutions
Connect Access Card for Fundamental Accounting Principles
- Please provide the accurate answer to this general accounting problem using valid techniques.arrow_forwardThompson, Inc. had accounts receivable of $580,000 and an allowance for doubtful accounts of $23,400 just before writing off as worthless an account receivable from Sullivan Company of $2,750. The net realizable value of the accounts receivable before and after the write-off was: A. $556,600 before and $556,600 after. B. $603,400 before and $600,650 after. C. $556,600 before and $553,850 after. D. $580,000 before and $577,250 after.arrow_forwardDetermine the dollar amount of finished goods inventoryarrow_forward
- Please provide the accurate solution to this financial accounting question using valid calculations.arrow_forwardI need help with this general accounting problem using proper accounting guidelines.arrow_forwardPlease provide the accurate answer to this financial accounting problem using valid techniques.arrow_forward
- I am looking for a reliable way to solve this financial accounting problem using accurate principles.arrow_forwardCan you explain the process for solving this General accounting question accurately?arrow_forwardI am searching for the accurate solution to this general accounting problem with the right approach.arrow_forward
- I need help solving this general accounting question with the proper methodology.arrow_forwardI need guidance with this general accounting problem using the right accounting principles.arrow_forwardPlease explain the solution to this general accounting problem using the correct accounting principles.arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





