Concept explainers
Concept:
Methods of
Some of the inventory valuation methods are as follows:
FIFO: Stands for First In First Out. Under this method of inventory valuation, the costs to be assigned to ending inventories are, the costs of the goods first purchased, i.e. the company assigns the closing inventory costs at the costs of the first purchase, since the goods purchased first are assumed to be sold first.
LIFO: Stands for Last In First Out. Under this method of inventory valuation, the costs to be assigned to ending inventories are, the costs of the goods last purchased, i.e. the company assigns the closing inventory costs at the costs of the last purchase, since the goods purchased first are assumed to be sold first.
WA: Stands for Weighted Average. Under this method of inventory valuation, the costs to be assigned to ending inventories are, the weighted average costs of purchases i.e. the total costs of purchases divided by the weights of products of the purchases, since the cost of goods purchased is averaged out.
SA: Stands for Simple Average. Under this method of inventory valuation, the costs to be assigned to ending inventories are, the simple average costs of purchases i.e. the total costs of purchases divided by the number of products of the purchases, since the cost of goods purchased is averaged out.
Methods a company can use to assign costs of goods sold and ending inventory.

Want to see the full answer?
Check out a sample textbook solution
Chapter 6 Solutions
FUNDAMENTAL ACCOUNTING PRINCIPLES
- On July 1, the accounts receivable account balance was $77,500. During July, $335,000 was collected from customers on account. Assuming the July 31 balance was $75,400, determine the fees billed to customers on account during July.arrow_forwardCan you solve this financial accounting problem using appropriate financial principles?arrow_forwardPlease explain the solution to this general accounting problem with accurate principles.arrow_forward
- The appropriate adjusting entry to be made at the end of the period would bearrow_forwardIvanhoe Company had these transactions during the current period. June 12 Issued 82,500 shares of $1 par value common stock for cash of $309,375. July 11 Issued 3,450 shares of $100 par value preferred stock for cash at $107 per share. Nov. 28 Purchased 2,650 shares of treasury stock for $13,250. Prepare the journal entries for the Ivanhoe Company transactions. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually. List all debit entries before credit entries. If no entry is required, select "No Entry" for the account titles and enter O for the amount in the relevant debit OR credit box. Entering zero in ALL boxes will result in the question being marked incorrect.)arrow_forwardFinancial Accounting Questionarrow_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





