Question

A company just starting business made the following four inventory purchases in June cases in June: $ 390 June June June June 1 10 15 28 150 units 200 units 200 units 150 units 598 630 510 $2.128 that there are 200 units on hand. The inventory A physical count of merchandise inventory method which results in the highest gross profit for June is the FIFO method b. the LIFO method. c. the weighted average unit cost method. d. not determinable. 9.Pasquale has the following inventory information. July 1 Beginning Inventory 20 units at $19 $300 Purchases 70 units at $20 1,400 Purchases 10 units at $24 240 $2,020 A physical count of merchandise inventory on July 31 reveals that there are 30 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for July is a $1,380. b. $1,414 c. $1.470 d $1.440. 10.Barley Company developed the following information about its inventories in applying the lower-of-cost-or-net realizable value (LCNRV) basis in valuing inventories: Product Cost Net Realizable Value $115,000 $120,000 80,000 158,000 73,000 162,000 If Barley applies the LCNRV basis, the value of the inventory reported on the balance sheet would be a. $346,000 b. $353,000 c. $355,000. d. $362,000. 11.Dulzura Company had beginning inventory of $60,000, ending inventory of $90,000, cost of goods sold of $600,000, and sales of $960,000. Dulzura's days in inventory is:

Answer 1

8
FIFO		LIFO		Weighted average
Units	Value	Units	Value	Units	Value
150	510	150	390
50	158	50	150
200	668	200	540	200	608
Weighted average = Total Value/ Total units
Units	Value	Average
700	2,128	3.04
Thus a is correct that is greatest profit margin shall be under FIFO, considering sales to be constant.

9
FIFO
Units	Per unit value	Value
10	24	240
20	20	400
30		640

Total Inventory Value	640
Total Purchases value	2,020
Cost of goods	1,380
Thus a is correct

10
Product	Cost	NRV	Lower
A	115,000	120,000	115,000
B	80,000	73,000	73,000
C	158,000	162,000	158,000
	353,000	355,000	346,000

Assuming that Barley applies Lower of cost or NRV basis on item by item basis, the Inventory value to be reported is $346,000. Hence a is correct

11
Beginning Inventory	60,000
Ending Inventory	90,000
Cost of goods sold	600,000
Sales	960,000

Days Inventory = [{(Opening + Closing Inventory)/2}/ Cost of Goods Sold]*365

(Opening + Closing Inventory)/2	75,000
Cost of goods sold	600,000
Days Inventory	46