Inventory includes raw materials, work-in-process goods and finished products which are held with the purpose of sale. Given: Accounting, Analysis, and Principles E Company sells two types of pumps. One is large and is for commercial use. The other is smaller and is used in residential swimming pools. The inventory data is available for the month of March and is provided in the question. Accounting (a) The cost of inventory on hand on March 31 and the cost of goods sold for March under first-in first-out (FIFO), assuming that E uses a periodic inventory system.

Question

1: Armand Giroux (single; 0 federal withholding allowances) earned weekly gross pay of $1,500. For each period, he makes a 401(k) retirement plan contribution of 8% of gross pay. The city in which he works (he lives elsewhere) levies a tax of 1% of an employee's taxable pay (which is the same for federal and local income tax withholding) on residents and 0.60% of an employee's taxable pay on nonresidents. Federal income tax withholding = $ State income tax withholding = $ Local income tax withholding = $ 144.10 69.00 8.28 2: Peter Quigley (married; 8 federal withholding allowances) earned weekly gross pay of $2,350. He contributed $100 to a flexible spending account during the period. The city in which he lives and works levies a tax of 2.7% of an employee's taxable pay (which is the same for federal and local income tax withholding) on residents and 1.9% of an employee's taxable pay on nonresidents. Federal income tax withholding = $ State income tax withholding = $ Local income tax…

Answer 1

Question

Chapter 8, Problem 2UJ

To determine

Introduction: Inventory includes raw materials, work-in-process goods and finished products which are held with the purpose of sale.

Given:

Accounting, Analysis, and Principles E Company sells two types of pumps. One is large and is for commercial use. The other is smaller and is used in residential swimming pools. The inventory data is available for the month of March and is provided in the question.

Accounting

(a)

The cost of inventory on hand on March 31 and the cost of goods sold for March under first-in first-out (FIFO), assuming that E uses a periodic inventory system.

To determine

(b)

The cost of inventory on hand on March 31 and the cost of goods sold for March. Assume E’s initial adoption of LIFO is on March 1 and E uses dollar-value LIFO and one pool, consisting of the combination of residential and commercial pumps. Use the double-extension method to determine the appropriate price indices. (Hint: The price index for February 28/March 1 should be 1.00.) (Round the index to three decimal places.)

To determine

Analysis

(c)

To explain: Assume you need to compute a current ratio for E. Which inventory method (FIFO or dollar-value LIFO) do you think would give you a more meaningful current ratio?

To determine

(d)

To explain: Some of E’s competitors use LIFO inventory costing and some use FIFO. How can an analyst compare the results of companies in an industry, when some use LIFO and others use FIFO?

To determine

Principles

To explain: Can companies change from one inventory accounting method to another? If a company changes to an inventory accounting method used by most of its competitors, what are the trade-offs in terms of the conceptual framework discussed in Chapter 2 of the textbook?

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Answer 2

Question

Chapter 8, Problem 2UJ

To determine

Introduction: Inventory includes raw materials, work-in-process goods and finished products which are held with the purpose of sale.

Given:

Accounting, Analysis, and Principles E Company sells two types of pumps. One is large and is for commercial use. The other is smaller and is used in residential swimming pools. The inventory data is available for the month of March and is provided in the question.

Accounting

(a)

The cost of inventory on hand on March 31 and the cost of goods sold for March under first-in first-out (FIFO), assuming that E uses a periodic inventory system.

To determine

(b)

The cost of inventory on hand on March 31 and the cost of goods sold for March. Assume E’s initial adoption of LIFO is on March 1 and E uses dollar-value LIFO and one pool, consisting of the combination of residential and commercial pumps. Use the double-extension method to determine the appropriate price indices. (Hint: The price index for February 28/March 1 should be 1.00.) (Round the index to three decimal places.)

To determine

Analysis

(c)

To explain: Assume you need to compute a current ratio for E. Which inventory method (FIFO or dollar-value LIFO) do you think would give you a more meaningful current ratio?

To determine

(d)

To explain: Some of E’s competitors use LIFO inventory costing and some use FIFO. How can an analyst compare the results of companies in an industry, when some use LIFO and others use FIFO?

To determine

Principles

To explain: Can companies change from one inventory accounting method to another? If a company changes to an inventory accounting method used by most of its competitors, what are the trade-offs in terms of the conceptual framework discussed in Chapter 2 of the textbook?

Expert Solution & Answer

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Answer 3

Question

Chapter 8, Problem 2UJ

To determine

Introduction: Inventory includes raw materials, work-in-process goods and finished products which are held with the purpose of sale.

Given:

Accounting, Analysis, and Principles E Company sells two types of pumps. One is large and is for commercial use. The other is smaller and is used in residential swimming pools. The inventory data is available for the month of March and is provided in the question.

Accounting

(a)

The cost of inventory on hand on March 31 and the cost of goods sold for March under first-in first-out (FIFO), assuming that E uses a periodic inventory system.

To determine

(b)

The cost of inventory on hand on March 31 and the cost of goods sold for March. Assume E’s initial adoption of LIFO is on March 1 and E uses dollar-value LIFO and one pool, consisting of the combination of residential and commercial pumps. Use the double-extension method to determine the appropriate price indices. (Hint: The price index for February 28/March 1 should be 1.00.) (Round the index to three decimal places.)

To determine

Analysis

(c)

To explain: Assume you need to compute a current ratio for E. Which inventory method (FIFO or dollar-value LIFO) do you think would give you a more meaningful current ratio?

To determine

(d)

To explain: Some of E’s competitors use LIFO inventory costing and some use FIFO. How can an analyst compare the results of companies in an industry, when some use LIFO and others use FIFO?

To determine

Principles

To explain: Can companies change from one inventory accounting method to another? If a company changes to an inventory accounting method used by most of its competitors, what are the trade-offs in terms of the conceptual framework discussed in Chapter 2 of the textbook?

Expert Solution & Answer

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Answer 4

Question

Chapter 8, Problem 2UJ

To determine

Introduction: Inventory includes raw materials, work-in-process goods and finished products which are held with the purpose of sale.

Given:

Accounting, Analysis, and Principles E Company sells two types of pumps. One is large and is for commercial use. The other is smaller and is used in residential swimming pools. The inventory data is available for the month of March and is provided in the question.

Accounting

(a)

The cost of inventory on hand on March 31 and the cost of goods sold for March under first-in first-out (FIFO), assuming that E uses a periodic inventory system.

To determine

(b)

The cost of inventory on hand on March 31 and the cost of goods sold for March. Assume E’s initial adoption of LIFO is on March 1 and E uses dollar-value LIFO and one pool, consisting of the combination of residential and commercial pumps. Use the double-extension method to determine the appropriate price indices. (Hint: The price index for February 28/March 1 should be 1.00.) (Round the index to three decimal places.)

To determine

Analysis

(c)

To explain: Assume you need to compute a current ratio for E. Which inventory method (FIFO or dollar-value LIFO) do you think would give you a more meaningful current ratio?

To determine

(d)

To explain: Some of E’s competitors use LIFO inventory costing and some use FIFO. How can an analyst compare the results of companies in an industry, when some use LIFO and others use FIFO?

To determine

Principles

To explain: Can companies change from one inventory accounting method to another? If a company changes to an inventory accounting method used by most of its competitors, what are the trade-offs in terms of the conceptual framework discussed in Chapter 2 of the textbook?

Expert Solution & Answer

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Answer 5

Chapter 8, Problem 2UJ

To determine

Introduction: Inventory includes raw materials, work-in-process goods and finished products which are held with the purpose of sale.

Given:

Accounting, Analysis, and Principles E Company sells two types of pumps. One is large and is for commercial use. The other is smaller and is used in residential swimming pools. The inventory data is available for the month of March and is provided in the question.

Accounting

(a)

The cost of inventory on hand on March 31 and the cost of goods sold for March under first-in first-out (FIFO), assuming that E uses a periodic inventory system.

To determine

(b)

The cost of inventory on hand on March 31 and the cost of goods sold for March. Assume E’s initial adoption of LIFO is on March 1 and E uses dollar-value LIFO and one pool, consisting of the combination of residential and commercial pumps. Use the double-extension method to determine the appropriate price indices. (Hint: The price index for February 28/March 1 should be 1.00.) (Round the index to three decimal places.)

To determine

Analysis

(c)

To explain: Assume you need to compute a current ratio for E. Which inventory method (FIFO or dollar-value LIFO) do you think would give you a more meaningful current ratio?

To determine

(d)

To explain: Some of E’s competitors use LIFO inventory costing and some use FIFO. How can an analyst compare the results of companies in an industry, when some use LIFO and others use FIFO?

To determine

Principles

To explain: Can companies change from one inventory accounting method to another? If a company changes to an inventory accounting method used by most of its competitors, what are the trade-offs in terms of the conceptual framework discussed in Chapter 2 of the textbook?

Answer 6

Chapter 8, Problem 2UJ

To determine

Introduction: Inventory includes raw materials, work-in-process goods and finished products which are held with the purpose of sale.

Given:

Accounting, Analysis, and Principles E Company sells two types of pumps. One is large and is for commercial use. The other is smaller and is used in residential swimming pools. The inventory data is available for the month of March and is provided in the question.

Accounting

(a)

The cost of inventory on hand on March 31 and the cost of goods sold for March under first-in first-out (FIFO), assuming that E uses a periodic inventory system.

Answer 7

Chapter 8, Problem 2UJ

To determine

Introduction: Inventory includes raw materials, work-in-process goods and finished products which are held with the purpose of sale.

Given:

Accounting, Analysis, and Principles E Company sells two types of pumps. One is large and is for commercial use. The other is smaller and is used in residential swimming pools. The inventory data is available for the month of March and is provided in the question.

Accounting

(a)

The cost of inventory on hand on March 31 and the cost of goods sold for March under first-in first-out (FIFO), assuming that E uses a periodic inventory system.

Answer 8

To determine

(b)

The cost of inventory on hand on March 31 and the cost of goods sold for March. Assume E’s initial adoption of LIFO is on March 1 and E uses dollar-value LIFO and one pool, consisting of the combination of residential and commercial pumps. Use the double-extension method to determine the appropriate price indices. (Hint: The price index for February 28/March 1 should be 1.00.) (Round the index to three decimal places.)

Answer 9

To determine

(b)

The cost of inventory on hand on March 31 and the cost of goods sold for March. Assume E’s initial adoption of LIFO is on March 1 and E uses dollar-value LIFO and one pool, consisting of the combination of residential and commercial pumps. Use the double-extension method to determine the appropriate price indices. (Hint: The price index for February 28/March 1 should be 1.00.) (Round the index to three decimal places.)

Answer 10

To determine

Analysis

(c)

To explain: Assume you need to compute a current ratio for E. Which inventory method (FIFO or dollar-value LIFO) do you think would give you a more meaningful current ratio?

Answer 11

To determine

Analysis

(c)

To explain: Assume you need to compute a current ratio for E. Which inventory method (FIFO or dollar-value LIFO) do you think would give you a more meaningful current ratio?

Answer 12

To determine

(d)

To explain: Some of E’s competitors use LIFO inventory costing and some use FIFO. How can an analyst compare the results of companies in an industry, when some use LIFO and others use FIFO?

Answer 13

To determine

(d)

To explain: Some of E’s competitors use LIFO inventory costing and some use FIFO. How can an analyst compare the results of companies in an industry, when some use LIFO and others use FIFO?

Answer 14

To determine

Principles

To explain: Can companies change from one inventory accounting method to another? If a company changes to an inventory accounting method used by most of its competitors, what are the trade-offs in terms of the conceptual framework discussed in Chapter 2 of the textbook?

Answer 15

To determine

Principles

To explain: Can companies change from one inventory accounting method to another? If a company changes to an inventory accounting method used by most of its competitors, what are the trade-offs in terms of the conceptual framework discussed in Chapter 2 of the textbook?

Answer 16

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Answer 17

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Ch. 8 - Prob. 1Q Ch. 8 - 2. Why should inventories be included in (a) a...Ch. 8 - 3. What is the difference between a perpetual...Ch. 8 - Prob. 4Q Ch. 8 - Prob. 5Q Ch. 8 - Prob. 6Q Ch. 8 - Prob. 7Q Ch. 8 - Prob. 8Q Ch. 8 - Prob. 9Q Ch. 8 - Prob. 10Q

Concept explainers

Videos

Analysis

(c)

To explain: Assume you need to compute a current ratio for E. Which inventory method (FIFO or dollar-value LIFO) do you think would give you a more meaningful current ratio?

(d)

To explain: Some of E’s competitors use LIFO inventory costing and some use FIFO. How can an analyst compare the results of companies in an industry, when some use LIFO and others use FIFO?

Principles

To explain: Can companies change from one inventory accounting method to another? If a company changes to an inventory accounting method used by most of its competitors, what are the trade-offs in terms of the conceptual framework discussed in Chapter 2 of the textbook?

Chapter 8 Solutions

Concept explainers

Videos

Analysis (c) To explain: Assume you need to compute a current ratio for E. Which inventory method (FIFO or dollar-value LIFO) do you think would give you a more meaningful current ratio?

(d) To explain: Some of E’s competitors use LIFO inventory costing and some use FIFO. How can an analyst compare the results of companies in an industry, when some use LIFO and others use FIFO?

Principles To explain: Can companies change from one inventory accounting method to another? If a company changes to an inventory accounting method used by most of its competitors, what are the trade-offs in terms of the conceptual framework discussed in Chapter 2 of the textbook?

Chapter 8 Solutions

Analysis

(c)

To explain: Assume you need to compute a current ratio for E. Which inventory method (FIFO or dollar-value LIFO) do you think would give you a more meaningful current ratio?

(d)

To explain: Some of E’s competitors use LIFO inventory costing and some use FIFO. How can an analyst compare the results of companies in an industry, when some use LIFO and others use FIFO?

Principles

To explain: Can companies change from one inventory accounting method to another? If a company changes to an inventory accounting method used by most of its competitors, what are the trade-offs in terms of the conceptual framework discussed in Chapter 2 of the textbook?