The first in, first out (FIFO) method of inventory valuation is a cost stream supposition that the first products obtained are likewise the first merchandise sold. In many organizations, this presumption intently coordinates the genuine stream of merchandise, as is viewed as the most hypothetically right inventory valuation method. The average cost method is an inventory costing method in which the cost of every thing in an inventory is determined on the basis of the average cost of every comparative great in the inventory. The average cost method is determined by partitioning the cost of products in inventory by the absolute number of things accessible available to be purchased. To choose: Compute ending inventory and cost of goods sold using the FIFO, LIFO and average cost method.
The first in, first out (FIFO) method of inventory valuation is a cost stream supposition that the first products obtained are likewise the first merchandise sold. In many organizations, this presumption intently coordinates the genuine stream of merchandise, as is viewed as the most hypothetically right inventory valuation method. The average cost method is an inventory costing method in which the cost of every thing in an inventory is determined on the basis of the average cost of every comparative great in the inventory. The average cost method is determined by partitioning the cost of products in inventory by the absolute number of things accessible available to be purchased. To choose: Compute ending inventory and cost of goods sold using the FIFO, LIFO and average cost method.
Solution Summary: The author explains the first in, first out (FIFO) method of inventory valuation and the average cost method.
Definition Definition Total cost of producing a certain quantity of a good, divided by the quantity produced. It is the sum of all costs (fixed and variable) required to produce one unit of output.
Chapter 6, Problem 82.1C
To determine
Introduction:
The first in, first out (FIFO) method of inventory valuation is a cost stream supposition that the first products obtained are likewise the first merchandise sold. In many organizations, this presumption intently coordinates the genuine stream of merchandise, as is viewed as the most hypothetically right inventory valuation method.
The average cost method is an inventory costing method in which the cost of every thing in an inventory is determined on the basis of the average cost of every comparative great in the inventory. The average cost method is determined by partitioning the cost of products in inventory by the absolute number of things accessible available to be purchased.
To choose:
Compute ending inventory and cost of goods sold using the FIFO, LIFO and average cost method.
Problem No. 1
On January 1, 2025, Manuel Cruz and Sherimae Diasalo agreed to form a partnership that will manufacture and sell
biscuits. The partnership agreement specified that Cruz is to invest cash of P1,000,000 and Diasalo is to contribute
land and building to serve as the office and factory of the business. The following amounts are applicable to the
property of Diasalo:
Acquisition Cost Fair Market Value
Land
Building
P1,000,000
500,000
P1,500,000
850,000
During the formation, it was found out that Cruz has accounts receivable amounting to P70,000 and the partners
agreed that it will be assumed by the partnership. The name of the partnership will be Fita Pan.
Required:
1. Prepare journal entry to record:
a. The investment of Cruz to the partnership
b. The investment of Diasalo to the partnershipood relay ni 000,219
2. Prepare the statement of financial position of the partnership as of January 1, 2025
Problem No. 2
The trial balance of Cleint Lumanao Nacho Supplies on February…
A company's stock price is
$80, with earnings per
share (EPS) of $10 and an
expected growth rate of
12%.
Kazama owns JKL Corporation stock with a basis of $20,000. He exchanges this for $24,000 of STU stock and $8,000 of STU securities as part of a tax-free reorganization. What is Kazama's basis in the STU stock?