Problem 6-68BInventory Costing Methods Objective 3Apply the four inventory costing methods to compute ending inventory and...
Problem 6-68BInventory Costing Methods
Objective 3Apply the four inventory costing methods to compute ending inventory and cost of goods sold under a perpetual inventory system.
4Analyze the financial reporting and tax effects of the various inventory costing methods.
6Evaluate inventory management using the gross profit and inventory turnover ratios.
Terpsichore Company uses a perpetual inventory system. For 2018 and 2019, Terpsichore has the following data:
|
Activity |
Units |
Purchase Price (per unit) |
Sale Price (per unit) |
|---|---|---|---|
|
2018 |
|||
|
Beginning inventory |
100 |
$45 |
|
|
Purchase 1, Feb. 25 |
700 |
52 |
|
|
Sale 1, Apr. 15 |
600 |
$90 |
|
|
Purchase 2, Aug. 30 |
500 |
56 |
|
|
Sale 2, Nov. 13 |
600 |
90 |
|
|
Purchase 3, Dec. 20 |
400 |
58 |
|
|
2019 |
|||
|
Sale 3, Mar. 8 |
400 |
90 |
|
|
Purchase 4, June 28 |
900 |
62 |
|
|
Sale 4, Dec. 18 |
200 |
90 |
Required:
-
For each year, compute cost of goods sold, the cost of ending inventory, and gross margin using FIFO.
Answer -
For each year, compute cost of goods sold, the cost of ending inventory, and gross margin using LIFO.
Answer -
For each year, compute cost of goods sold, the cost of ending inventory, and gross margin using the average cost method. (Note: Use four decimal places for per-unit calculations and round all other numbers to the nearest dollar.)
Answer -
CONCEPTUAL CONNECTION Which method would result in the lowest amount paid for taxes?
-
CONCEPTUAL CONNECTION Which method produces the most realistic amount for income? For inventory? Explain your answer.
-
CONCEPTUAL CONNECTION Compute Terpsichore’s gross profit ratio and inventory turnover ratio under each of the three inventory costing methods. (Note: Round answers to two decimal places.) How would the choice of inventory costing method affect these ratios?
4&5 ARE THE ONLY ONES THAT NEED TO BE COMPLETED
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Exercise 6-41
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Crandall Distributors uses a perpetual inventory system and has
the following data available for inventory, purchases, and sales
for a recent year:
1. Compute the cost of ending inventory and the
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Learning Objective 7 Appendix 6A E6A-26 Comparing ending merchandise inventory, cost of goods gross profit using...
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Begin by computing the cost of goods sold and cost of ending merchandise inventory using the...
Begin
by computing the cost of goods sold and cost of ending merchandise
inventory using the FIFO inventory costing method. Enter the
transactions in chronological order, calculating new inventory on
hand balances after each transaction. Once all of the transactions
have been entered into the perpetual record, calculate the
quantity and total cost of merchandise inventory purchased, sold,
and on hand at the end of the period. (Enter the oldest inventory layers
first.)
A Requirements X 1. 2. Compute cost...
ning Objective 7 Appendix 6A E 6A-26 Comparing ending merchandise inventory, cost of goods sold, and gross profit u...
ning Objective 7 Appendix 6A E 6A-26 Comparing ending merchandise inventory, cost of goods sold, and gross profit using the periodic inventory system FIFO, LIFO, and weighted average methods Assume that Jump Coffee Shop completed the following periodic inventory transactions for a line of merchandise inventory: 2. COGS $513 534 603 Jun. 1 Beginning merchandise inventory 17 units @ $ 15 each 12 Purchase 5 units @ $ 19 each 20 Sale 14 units @ $ 37 each 24 Purchase...
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E6A-26 Comparing ending merchandise inventory, cost of goods sold, and gross profit using the periodic inventory...
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Requirement 1. Compute cost of goods sold and gross profit using the FIFO inventory costing method....
Requirement 1. Compute cost of goods sold and gross profit using
the FIFO inventory costing method.
Begin by computing the cost of goods sold and cost of ending
merchandise inventory using the FIFO inventory costing method.
Enter the transactions in chronological order, calculating new
inventory on hand balances after each transaction. Once all of the
transactions have been entered into the perpetual record,
calculate the quantity and total cost of merchandise inventory
purchased, sold, and on hand at the end...
Inventory Costing Methods On June 1, Welding Products Company had a beginning inventory of 210 cases of welding rods that had been purchased for $88 per case. Welding Products purchased 1,150 cases at a cost of $95 per case on June 3. On June 19, the company purchased another 950 cases at a cost of $112 per case. Sales data for the welding rods are as follows: Date Cases Sold June 9 990 June 29 975 Welding Products uses a...
Exercise 6-50 Inventory Costing Methods Crandall Distributors uses a perpetual inventory system and has the following data available for inventory, purchases, and sales for a recent year: Sale Price (per unit) Activity Units Purchase Price (per unit) $7.10 7.20 110 Beginning inventory Purchase 1, Jan. 18 Sale 1 $12.00 12.00 Sale 2 7.50 Purchase 2, Mar. 10 Sale 3 Sale 4 Purchase 3, Sept. 30 12.00 12.50 7.70 Sale 5 12.50 Required: 1. Compute the cost of ending inventory and...
Learning Objective 7 Appendix 6A E6A-26 Comparing ending merchandise inventory, cost of goods gross profit using the periodic inventory system-FIFO, LIFO, and weighted average methods Assume that Jump Coffee Shop completed the following periodic inventory transactions for a line of merchandise inventory: 2. COGS $513 534 603 603 90 Jun. 1 Beginning merchandise inventory 17 units @ $ 15 each 12 Purchase 5 units @ $ 19 each 20 Sale 14 units @ $ 37 each 24 Purchase 11 units...
Begin
by computing the cost of goods sold and cost of ending merchandise
inventory using the FIFO inventory costing method. Enter the
transactions in chronological order, calculating new inventory on
hand balances after each transaction. Once all of the transactions
have been entered into the perpetual record, calculate the
quantity and total cost of merchandise inventory purchased, sold,
and on hand at the end of the period. (Enter the oldest inventory layers
first.)
A Requirements X 1. 2. Compute cost...
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Exercise 6-49 Effects of Inventory Costing Methods Borgia Enterprises has the following statement of earnings data available for 2018: Sales revenue Operating expenses Interest expense $737,200 243,700 39,500 34% Income tax rate Borgia uses a perpetual inventory accounting system and the weighted average cost method. Borgia is considering adopting the FIFO method for costing inventory. Borgia's accountant prepared the following data: If Weighted Average Cost Used $ 61,850 403,150 If FIFO Used $ 80,200 384,800 Ending inventory Cost of goods...
E6A-26 Comparing ending merchandise inventory, cost of goods sold, and gross profit using the periodic inventory system-FIFO, Lino weighted average methods Assume that Jump Coffee Shop completed the following periodic inventory transac for a line of merchandise inventory: Jun. 1 Beginning merchandise inventory 17 units @ $ 15 each 12 Purchase 5 units @ $ 19 each 20 Sale 14 units @ $ 37 each 24 Purchase 11 units @ $ 23 each 513 29 Sale 13 units @ $...
Exercise 5-7 Perpetual: Inventory costing methods-FIFO and LIFO LO P1 Required: Hemming uses a perpetual inventory system. 1. Determine the costs assigned to ending inventory and to cost of goods sold using FIFO. 2. Determine the costs assigned to ending inventory and to cost of goods sold using LIFO. 3. Compute the gross margin for FIFO method and LIFO method.
Requirement 1. Compute cost of goods sold and gross profit using
the FIFO inventory costing method.
Begin by computing the cost of goods sold and cost of ending
merchandise inventory using the FIFO inventory costing method.
Enter the transactions in chronological order, calculating new
inventory on hand balances after each transaction. Once all of the
transactions have been entered into the perpetual record,
calculate the quantity and total cost of merchandise inventory
purchased, sold, and on hand at the end...
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