Financial Accounting
Financial Accounting
7th Edition
ISBN: 9781118162286
Author: Kimmel, Paul D.
Publisher: John Wiley & Sons Inc
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Chapter 6, Problem 6.7BP

(a)

To determine

Inventory turnover ratio: This is a financial measure that is used to evaluate as to how many times a company sells or uses its inventory during an accounting period.

Formula:

Inventory turnover = Cost of goods soldAverage inventory

Days in inventory: Days in inventory are used to determine number of days a particular company takes to make sales of the inventory available with them.

Formula:

Days' in inventory=Days in accounting periodInventory turnover

LIFO (Last-in-first-out) Reserve: It is a contra inventory account that shows the difference between the inventory cost under FIFO (First-in-first-out) and inventory cost under LIFO. This account is recorded when a company uses FIFO method for its inventory valuation but uses LIFO method for financial reporting.

To compute: The inventory turnover and days in inventory of Company N.

(b)

To determine

To compute: The current ratio using the data.

(c)

To determine

To compute: The current ratio after adjusting the LIFO reserve.

(d)

To determine

To comment: On the difference between the current ratio based on inventory using LIFO and the current ratio after adjusting for the LIFO reserve.

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Chapter 6 Solutions

Financial Accounting

Ch. 6 - Which assumed inventory cost flow method: (a)...Ch. 6 - Prob. 12QCh. 6 - Prob. 13QCh. 6 - Prob. 14QCh. 6 - Prob. 15QCh. 6 - Prob. 16QCh. 6 - Prob. 17QCh. 6 - Prob. 18QCh. 6 - Prob. 19QCh. 6 - Why is it inappropriate for a company to include...Ch. 6 - Prob. 21QCh. 6 - Prob. 22QCh. 6 - Prob. 23QCh. 6 - When perpetual inventory records are kept, the...Ch. 6 - How does the average-cost method of inventory...Ch. 6 - Prob. 26QCh. 6 - Prob. 6.1BECh. 6 - Prob. 6.2BECh. 6 - Prob. 6.3BECh. 6 - Prob. 6.4BECh. 6 - Prob. 6.5BECh. 6 - Prob. 6.6BECh. 6 - Prob. 6.7BECh. 6 - Prob. 6.8BECh. 6 - Prob. 6.9BECh. 6 - Prob. 6.10BECh. 6 - Prob. 6.11BECh. 6 - Do It! 6-1 Dobler Company just took its physical...Ch. 6 - Prob. 6.2DIRCh. 6 - Prob. 6.3DIRCh. 6 - Prob. 6.4DIRCh. 6 - E6-1 Columbia Bank and Trust is considering giving...Ch. 6 - E6-2 Kevin Farley, an auditor with Koews CPAs, is...Ch. 6 - Prob. 6.3ECh. 6 - E6-4 Delmott sells a snowboard, Xpert, that is...Ch. 6 - Prob. 6.5ECh. 6 - E6-6 On December 1, Quality Electronics has three...Ch. 6 - Prob. 6.7ECh. 6 - Prob. 6.8ECh. 6 - Prob. 6.9ECh. 6 - Prob. 6.10ECh. 6 - Prob. 6.11ECh. 6 - Prob. 6.12ECh. 6 - Prob. 6.13ECh. 6 - Prob. 6.14ECh. 6 - Prob. 6.15ECh. 6 - Prob. 6.1APCh. 6 - Prob. 6.2APCh. 6 - Prob. 6.3APCh. 6 - Prob. 6.4APCh. 6 - Prob. 6.5APCh. 6 - Prob. 6.6APCh. 6 - Prob. 6.7APCh. 6 - Prob. 6.8APCh. 6 - Prob. 6.9APCh. 6 - Prob. 6.1BPCh. 6 - Prob. 6.2BPCh. 6 - Prob. 6.3BPCh. 6 - Prob. 6.4BPCh. 6 - Prob. 6.5BPCh. 6 - Prob. 6.6BPCh. 6 - Prob. 6.7BPCh. 6 - Prob. 6.8BPCh. 6 - Prob. 6.9BPCh. 6 - Prob. 1CPCh. 6 - Prob. 6.1BYPCh. 6 - Prob. 6.2BYPCh. 6 - The July 15, 2010, edition of CFO.com contains an...Ch. 6 - Prob. 6.4BYPCh. 6 - Prob. 6.6BYPCh. 6 - Prob. 6.7BYPCh. 6 - Prob. 6.8BYPCh. 6 - Prob. 6.9BYPCh. 6 - Prob. 6.10BYPCh. 6 - Prob. 6.1IFRSCh. 6 - Prob. 6.2IFRSCh. 6 - Prob. 6.3IFRSCh. 6 - Prob. 6.4IFRS
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