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1.
Perpetual Inventory System refers to the inventory system that maintains the detailed records of every inventory transactions related to purchases and sales on a continuous basis. It shows the exact on-hand-inventory at any point of time.
In First-in-First-Out method, the cost of initial purchased items are sold first. The value of the ending inventory consists the recent purchased items.
In Last-in-First-Out method, the cost of last purchased items are sold first. The value of the closing stock consists the initial purchased items.
In Average Cost Method the cost of inventory is priced at the average rate of the goods available for sale. Following is the mathematical representation:
To Prepare: The perpetual inventory record for the merchandise inventory using the FIFO inventory costing method.
2.
To Prepare: The perpetual inventory record for the merchandise inventory using the LIFO inventory costing method.
3.
To Prepare: The perpetual inventory record for the merchandise inventory using the weighted average inventory costing method.
4.
The Company’s cost of goods sold for August using FIFO, LIFO, and weighted-average inventory costing methods.
5.
To Compute: The gross profit for August using FIFO, LIFO, and weighted-average inventory costing method.
6.
To Explain: The method that the company should use to maximize gross profit.
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Chapter 6 Solutions
Horngren's Financial & Managerial Accounting, The Managerial Chapters Plus MyLab Accounting with Pearson eText - Access Card Package (6th Edition)
- Mead Incorporated began operations in Year 1. Following is a series of transactions and events involving its long-term debt investments in available-for-sale securities. Year 1 January 20 Purchased Johnson & Johnson bonds for $20,500. February 9 Purchased Sony notes for $55,440. June 12 Purchased Mattel bonds for $40,500. December 31 Fair values for debt in the portfolio are Johnson & Johnson, $21,500; Sony, $52,500; and Mattel, $46,350. Year 2 April 15 Sold all of the Johnson & Johnson bonds for $23,500. July 5 Sold all of the Mattel bonds for $35,850. July 22 Purchased Sara Lee notes for $13,500. August 19 Purchased Kodak bonds for $15,300. December 31 Fair values for debt in the portfolio are Kodak, $17,325; Sara Lee, $12,000; and Sony, $60,000. Year 3 February 27 Purchased Microsoft bonds for $160,800. June 21 Sold all of the Sony notes for $57,600. June 30 Purchased Black & Decker bonds for $50,400. August 3 Sold all of the Sara…arrow_forwardWhat is the ending inventory?arrow_forwardMaple industries uses the straight line method solution general accounting questionarrow_forward
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