To Know the difference of 2017 Vs 2016 for the method of FIFO and Average -
2017 | 2016 | |
Cost of goods sold (FIFO) | 55 | 53 |
Cost of goods sold (average) | 86 | 82 |
Difference | 31 | 29 |
Cost of goods of average inventory method > FIFo method of valuation . Reporting higher cost of goods sold i.e expenses reduces the profit and impacting retained earnings.
Journal entry for cumulative difference of 2017 and 2017 (31+29) is as below :
Retained Earnings Dr... 60
To Inventory 60
2.
2018 | 2017 | ||
Revenues | 570 | 540 | |
Less: Cost of goods sold (average) | 92 | 86 | |
Less: Operating Expenses | 314 | 310 | |
Net Income | 164 | 144 |
3.
At the beginning of Jan 2017 | |
Revenues | 540 |
Less: Cost of goods sold (FIFO | 55 |
Less: Operating Expenses | 310 |
Net Income | 175 |
Less : Dividend Paid | 34 |
Retained Earnings | 141 |
4.
At the beginning of Jan 2017 | ||
FIFO | Average | |
Revenues | 530 | 530 |
Less: Cost of goods sold | 53 | 82 |
Less: Operating Expenses | 302 | 302 |
Net Income | 175 | 146 |
Less : Dividend Paid | 34 | 34 |
Retained Earnings | 141 | 112 |
During 2016 (ts first year of operations) and 2017, Batali Foods used the FIFO inventory costing...
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