Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 8, Problem 8.17E
FIFO, LIFO, and average cost methods
• LO8–1, LO8–4
Causwell Company began 2018 with 10,000 units of inventory on hand. The cost of each unit was $5.00. During 2018 an additional 30,000 units were purchased at a single unit cost, and 20,000 units remained on hand at the end of 2018 (20,000 units therefore were sold during 2018). Causwell uses a periodic inventory system. Cost of goods sold for 2018, applying the average cost method, is $115,000. The company is interested in determining what cost of goods sold would have been if the FIFO or LIFO methods were used.
Required:
1. Determine the cost of goods sold for 2018 using the FIFO method. [Hint: Determine the cost per unit of 2018 purchases.]
2. Determine the cost of goods sold for 2018 using the LIFO method.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
10
Vargas Company uses the perpetual inventory method. Vargas purchased 2,200 units of inventory that cost $23.00 each. At a later date
the company purchased an additional 2,600 units of inventory that cost $24.00 each. Vargas sold 2,300 units of inventory for $27.00. If
Vargas uses a FIFO cost flow method, the amount of cost of goods sold appearing on the income statement will be:
1
nts
01:10:09
Multiple Choice
$50,600.
$53,000
$9,100
$6,900.
9
Management of Inventory
9.22
(1) What is the total annual cost of the existing inventory policy?
(ii) How much money would be saved by employing the economic order quantity (EOQ) ?
[Ans. (1) 65,063 (including cost of boxes); (ii) 62.50 or say 63]
8. Ace Ltd. Manufactures a product and the following particulars are collected for the year ended
March, 2011:
1000 Units
Monthly demand
*100
$ Cost of placing an order
15 per unit
Annual carring cost
50 units per weak
Normal usage
25 units per week
Minimum usage
Maximum usage
75 units per week
4-6 weeks
Re-order period
You are required to calculate :
(i) Re-order quantity
) Re-order level
(iii) Minimum level
(iv) Maximum level
(v) Average stock level.
[Ans. (i) 186 units, (ii) 450 units; (iii) 200 units; (iv) 536 units; (v) 368 units, or 293 units]
Chapter 8 Solutions
Intermediate Accounting
Ch. 8 - Describe the three types of inventory of a...Ch. 8 - What is the main difference between a perpetual...Ch. 8 - The Cloud Company employs a perpetual inventory...Ch. 8 - The Bockner Company shipped merchandise to Laetner...Ch. 8 - What is a consignment arrangement? Explain the...Ch. 8 - Prob. 8.6QCh. 8 - The Esquire Company employs a periodic inventory...Ch. 8 - Prob. 8.8QCh. 8 - Its common in the electronics industry for unit...Ch. 8 - Explain why proponents of LIFO argue that it...
Ch. 8 - Prob. 8.11QCh. 8 - Describe the ratios used by financial analysts to...Ch. 8 - Prob. 8.13QCh. 8 - Prob. 8.14QCh. 8 - The Austin Company uses the dollar-value LIFO...Ch. 8 - Identify any differences between U.S. GAAP and...Ch. 8 - Determining ending inventory; periodic system ...Ch. 8 - Prob. 8.2BECh. 8 - Prob. 8.3BECh. 8 - Purchas e discounts; gross method LO83 On...Ch. 8 - Prob. 8.5BECh. 8 - Prob. 8.6BECh. 8 - Inventor y cost flow methods; perpetual system ...Ch. 8 - LIFO method LO84 Esquire Inc. uses the LIFO...Ch. 8 - LIFO method LO84 AAA Hardware uses the LIFO...Ch. 8 - LIFO liquidation LO86 Refer to the situation...Ch. 8 - Prob. 8.11BECh. 8 - Ratio analysis LO87 Selected financial statement...Ch. 8 - Dollar-value LIFO LO88 At the beginning of 2018,...Ch. 8 - Perpetual inventory system; journal entries LO81...Ch. 8 - Prob. 8.2ECh. 8 - Determining cost of goods sold; periodic inventory...Ch. 8 - Perpetual and periodic inventory systems compared ...Ch. 8 - Prob. 8.6ECh. 8 - Goods in transit; consignment LO82 The December...Ch. 8 - Physical quantities and costs included in...Ch. 8 - Prob. 8.9ECh. 8 - Prob. 8.10ECh. 8 - Prob. 8.11ECh. 8 - FASB codification research LO82, LO83 Access the...Ch. 8 - Inventory cost flow methods; periodic system ...Ch. 8 - Inventory cost flow methods; perpetual system ...Ch. 8 - Comparison of FIFO and LIFO; periodic system ...Ch. 8 - Average cost method; periodic and perpetual...Ch. 8 - FIFO, LIFO, and average cost methods LO81, LO84...Ch. 8 - Supplemental LIFO disclosures; LIFO reserve; AEP...Ch. 8 - LIFO liquidation LO81, LO84, LO86 The Reuschel...Ch. 8 - Dollar-value LIFO LO88 On January 1, 2018, the...Ch. 8 - Dollar-value LIFO LO88 Mercury Company has only...Ch. 8 - Dollar-value LIFO LO88 Carswell Electronics...Ch. 8 - Concepts; terminology LO81 through LO85 Listed...Ch. 8 - Various inventory transactions; journal entries ...Ch. 8 - Prob. 8.2PCh. 8 - Prob. 8.4PCh. 8 - Various inventory costing methods LO81, LO84...Ch. 8 - Various inventory costing methods LO81, LO84...Ch. 8 - Supple mental LIFO disclosures; Caterpillar LO84,...Ch. 8 - LIFO liquidation LO84, LO86 Taylor Corporation...Ch. 8 - LIFO liquidation LO84, LO86 Cansela Corporation...Ch. 8 - Prob. 8.11PCh. 8 - Integrating problem; inventories and accounts...Ch. 8 - Dollar-value LIFO LO88 On January 1, 2018, the...Ch. 8 - Dollar-value LIFO LO88 Kingston Company uses the...Ch. 8 - Dollar-value LIFO LO88 On January 1, 2018,...Ch. 8 - Prob. 8.1BYPCh. 8 - Real World Case 82 Physical quantities and costs...Ch. 8 - Judgment Case 83 The specific identification...Ch. 8 - Prob. 8.4BYPCh. 8 - Prob. 8.5BYPCh. 8 - Judgment Case 86 Goods in transit LO82 At the end...Ch. 8 - Ethics Case 87 Profit manipulation LO84 In 2017...Ch. 8 - Real World Case 88 Effects of inventory valuation...Ch. 8 - Real World Case 89 Effects of inventory valuation...Ch. 8 - Communication Case 810 Dollar-value LIFO method ...Ch. 8 - Prob. 8.11BYPCh. 8 - Prob. 8.CCTCCh. 8 - Prob. CCIFRS
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- 6:59 P IR1_MIDTERM_20201.pdf 62. Macchiato Company sells one product which it purchases from various suppliers. The trial balance on December 31, 2017 included the following: Sales (100,000 units at P150) Sales discount 15,000,000 1,000,000 9,300,000 400,000 Purchase Purchase discount The inventory purchases during 2017 were as follows: Units Unit Total cost cost 20,000 60 30,000 40,000 50,000 10,000 80 150,000 Macchiato's accounting policy is to report inventory in its financial statements at the lower of cost or net Beginning inventory, January 1 Purchases, quarter ended March 31 Purchases, quarter ended June 30 Purchases, quarter ended Sept. 30 Purchases, quarter ended Dec. 31 1,200,000 1,950,000 2,800,000 3,750,000 800,000 10,500.000 65 70 75 realizable value. Cost is determined under the first-out method. Macchiato has determined that, on December 31, 2017, the replacement cost of its inventory was P70 per unit while. the net realizable value was P72 per unit. The normal profit…arrow_forwardDogarrow_forwardsarrow_forward
- FIFO and LIFO Costs Under Perpetual Inventory System The following units of an item were available for sale during the year: Beginning inventory 43,000 units @ $49 11,436 units @ $74 18,000 units @ $50 38,539 units @ $74 22,000 units @ $53 32,656 units @ $76 The firm uses the perpetual inventory system, and there are 369 units of the item on hand at the end of the year. a. What is the total cost of the ending inventory according to FIFO? b. What is the total cost of the ending inventory according to LIFO? Sale First purchase Sale Second purchase Salearrow_forwardScreenshot attached for question thanks ijt4tjo4tjoijto ii5jto5 i i ogwarrow_forwardQuestion 9 of 13 > 0/1 Larkspur, Inc. uses a periodic inventory system and reports the following for the month of June. Unit Date Explanation Units Cost Total Cost June 1 Inventory 130 $5 $ 650 12 Purchase 340 6 2,040 23 Purchase 200 1,400 30 Inventory 203 (a) X Your answer is incorrect. Compute the cost of the ending inventory and the cost of goods sold under FIFO, LIFO, and average-cost. (Round per unit cost to 3 decimal places, e.g. 15.647 and final answers to 0 decimal places, e.g. 5,125.) FIFO LIFO Average-cost Cost of the ending inventory 2$ 1640 1310 $ 1464 Cost of goods sold 2$ 2630 2$ 2960 2$ 2806arrow_forward
- A & B ?arrow_forwardInventory Costing Methods—Perpetual Method Chou Sales Corporation uses the perpetual inventory system. On January 1, 2018, Chen had 1,000 units of product A with a unit cost of $20 per unit. A summary of purchases and sales during 2018 follows: UnitCost UnitsPurchased UnitsSold Feb.2 400 Apr.6 $22 1,800 July 10 1,600 Aug.9 25 800 Oct.23 800 Dec.30 28 1,400 Requireda. Assume that Chou uses the first-in, first-out method. Compute the cost of goods sold for 2018 and the ending inventory balance at December 31, 2018, for product A.b. Assume that Chou uses the last-in, first-out method. Compute the cost of goods sold for 2018 and the ending inventory balance at December 31, 2018, for product A. c. Assume that Chou uses the weighted-average cost method. Compute the cost of goods sold for 2018 and the ending inventory balance at December 31, 2018, for product A. Do not round until your final answers. Round to the nearest dollar. a. First-In,…arrow_forwardHar Don't upload any imagearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
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:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
IAS 29 Financial Reporting in Hyperinflationary Economies: Summary 2021; Author: Silvia of CPDbox;https://www.youtube.com/watch?v=55luVuTYLY8;License: Standard Youtube License