(a) average-cost, (b) LIFO, and (c) FIFO. Explain how you calculated each answer. Hi Welcome to Just Answer. The ending inventory contains 200 units. Since the purchase price increases throughout the month, the ending inventory cost would be different when we use different ways in computing the cost. Average Cost Method: The price can be computed using a weighted average method. So, the price is $3.5 per unit. The ending inventory cost is $3.5 (200) = $700 FIFO: Units purchased first
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$590.00 Inventory $590.00 (To record merchandise sold to Pocras Co.) BE6-5 If Moraine Company used the FIFO method then the amount of cogs is $12.40 rather than $12.80 if using LIFO. It is referred to as a phantom credit since using one method can be higher or lower than using another. BE6-7 Olsson inventory Inventory Cost Market Lower of Categories
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1. Arguments for and against LFO abolition in the US a) What are the arguments in favour of retaining LIFO? The arguments are being made on a number of different grounds so be clear to separate these out. b) What are the arguments in favour of the US abolishing LIFO? c) Should decisions on matters such as this be made on the basis of what is the most appropriate from an accounting perspective (i.e. principles) or from the perspective of the impact of the decision on the real economy (i
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company uses LIFO, the value of closing stock will be lesser than the value calculated under FIFO method and the closing stock will be lesser in LIFO due to the higher cost of sales which in turn would result in lesser gross profit. This is transferred to Profit & Loss Account/Income Statement/Statement of Financial Performance which in turn would result in lesser net profit & high tax savings as tax would be levied on lesser Net Profit. Here Golf Challenge Corp. can use FIFO method to comply
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1.) Costs assigned to the building of a house should appear on the income statement when Answer | a. | the purchase order to manufacture the house is received. | | b. | the house is sold. | | c. | cash is collected for the sale of the house. | | d. | the house is completed. | 2.) The basic document for keeping track of costs in a job order costing system is a Answer | a. | labor time card. | | b. | job order cost card. | | c. | process cost report. | | d. | materials
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April 10 | Sale | 60 | 5,000 | 300,000 | April 19 | Sale | 30 | 5,000 | 150,000 | April 28 | Purchase | 100 | 2,200 | 220,000 | Required: 1. Record the inventory, purchases and cost of goods sold in a Perpetual Inventory record using the FIFO method. 2. Determine the total sales and the total cost of goods sold for the period. Journalize the entries in the sales and cost of goods sold account. Assume that all sales were on account. 3. Determine the gross profit from sales for
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of materials or supplies to be consumed in the production process or in the rendering of services. Under the ASC 330-10-30, initial measurement cost formulas are: • Specific Identification • First-in, First-out (“FIFO”) • Weighted-Average Cost • Last-in, First-out (“LIFO”) Whereas IFRS does not allow the costing method use of last-in-first-out. Inventory is subsequently measured at the lower of cost or market (ASC 330-10-35). Market is defined as current replacement cost, which is limited
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retailer, has historically used FIFO for valuing its inventory. In the last few years, Bobby's business has become quite profitable and Bobby's accountant suggests that Bobby switch to the LIFO inventory system to minimize the taxable income. According to the consistency principle, Bobby can change the accounting methods for a justifiable reason for example like minimizing taxes is an acceptable reason is debatable. Assume Bobby's Computers switched from FIFO to LIFO in year 2. In year 3, Bobby's income
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Case 1: Merrimack Tractors and Mowers, Inc: LIFO or FIFO? 1. Study the financial information for reel mower units that James Colburn prepared for Rick Martino. (Assume that reel mower units are typical of all classes of inventory at Merrimack.) Prepare a pro-forma income statement assuming no changes in accounting policy for 2008 assuming that the company sells 10,000 units each quarter at a price of $2,000 per unit with Sales General and Administration costs the same as for 2007. The cost
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to record a change in depreciation methods. c 26. Disclosures required for a change in depreciation methods. c 27. Change from percentage-of-completion to completed-contracts. d 28. Disclosures required for a change from LIFO to FIFO. b 29. Change from FIFO to LIFO. c 30. Change in accounting estimate. a 31. Change in accounting estimate. b 32. Identify a change in accounting estimate. b 33. Change in accounting estimate. c 34. Identify a change in accounting estimate. d 35. Identify
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