Introduction:
The first in, first out (FIFO) method of
The average cost method is an inventory costing method in which the cost of every thing in an inventory is determined on the basis of the average cost of every comparative great in the inventory. The average cost method is determined by partitioning the cost of products in inventory by the absolute number of things accessible available to be purchased.
To choose:
Compute ending inventory and cost of goods sold using the FIFO, LIFO and average cost method.
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Cornerstones of Financial Accounting
- CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT In addition to developing online fan communities, Cam and Anna believe that they could increase Front Row Entertainments revenue by selling live-performance DVDs at the concert. Front Row records the following activity between May and August 2019 for one of its artists: Front Row sells all of its DVDs for $15 each and uses a perpetual inventory system. Required: Discuss the advantages and disadvantages of each method.arrow_forward2. Beta Merchandising Company purchases mobiles directly from manufacturers and sells it to small retailers. The following transactions occurred during 2020: March, 21st: 80 mobiles on hand @ RO 40 each. May, 14th: 120 mobiles purchased @ RO 50 each. July, 10th: 80 mobiles purchased @ RO 60 each. September 16th: 50 mobiles purchased @ 80 each Alpha merchandising sold 300 mobiles during 2020 Required: Compute the Cost of Inventory sold during 2020 and the value of closing inventory under the following cost inventory methods. (a). First in, first out (FIFO) (b). Last in, first out (LIFO) (c) Average cost methodarrow_forwardA musical group plans to sell T-shirts bearing their logo at an upcoming concert. They find a supplier who charges $2.50 per plain T-shirt. Printing the logo on the shirt requires a set-up charge of $50 for the order plus $0.75 per shirt. The group places an order for 200 T-shirts and pays a shipping fee of $15 upon receipt. What is the total dollar amount that should be debited to the inventory account for the 200 T-shirts?arrow_forward
- NIZWA ELECTRONICS is doing a merchandise business. The business selling all electronics items. The business has made the following purchases and sales during the month of May 2019. The following information was taken from the inventory records during May 2019. The business had Opening inventory of 20 Sar ung Galaxy Mobile at OMR 60 each on 1st May 2019. On May 3, Purchase 25 numbers at OMR 50 each and May 31 Sold 25 numbers at 70 each. What will be the Cost of goods sold at the end of May 31 assumes that business uses LIFO method?arrow_forwardData for the next 6 questions: You are accountant for New Horizon Merchandising Company. New Horizon Merchandising Company buys and sells a product called Zoom. Company uses Perpetual Inventory System with LIFO method for inventory valuation. New Horizon uses Net Method for accounting for its purchases and sales. On January 1, 2019, New Horizon’s merchandise inventory on hand consisted of the following: Zoom: Quantity Cost per Unit 1st Purchase 200 $4 2nd Purchase 110 $5 New Horizon Company purchased 300 units of Zoom at $5.50 each plus $99 sales taxes. Terms were 2/10, n/30, FOB Shipping Point.Shipping cost was $51.Provide the necessary journal entry to record the transaction. Debit Credit Assume New Horizon paid for the above purchase within discount period. Provide the necessary journal entry to record the transaction. Debit Credit Assume New Horizon paid for the…arrow_forwardNIZWA ELECTRONICS is doing a merchandise business. The business is selling all electronics items. The business has made the following purchases and sales during the month of May 2019. The following information was taken from the inventory records during May 2019. The business had Opening inventory of 20 Samsung Galaxy Mobile at OMR 60 each on 1st May 2019. On May 3, Purchase 25 numbers at OMR 50 each and May 31 Sold 25 numbers at 70 each. What will be the Cost of goods sold at the end of May 31 assumes that business uses LIFO method?arrow_forward
- Sport Box sells a wide variety of sporting equipment. The following is information on the purchases and sales of their top selling hockey stick. The hockey stick sells for $125. Description Units Unit Cost Mar. 1 Beginning Inventory 15 $ 40 Mar. 3 Purchase 60 $ 45 Mar. 6 Purchase 110 $ 50 Mar. 17 Sale 55 Mar. 23 Purchase 50 $ 50 Mar. 31 Sale 140 Required: Calculate the cost of goods sold and ending inventory under the perpetual inventory system using the following methods. (Do not round your "Unit Cost" answers. Round all other intermediate and final answers to nearest whole dollar.)arrow_forwardRequired information [The following information applies to the questions displayed below.] Sylvester has a bird shop that sells canaries. Sylvester maintains accurate records on the number of birds purchased from its suppliers and the number sold to customers. The records show the following purchases and sales during 2021. Cost per Unit Date Transactions Units Total Cost Beginning inventory Purchase $ 28 $1,036 January 1 April 14 August 22 October 29 37 2,040 3,776 2,822 68 30 Purchase Purchase 118 32 83 34 306 $9,674 Jan. 1-Dec. 31 Sales ($48 each) 272 Sylvester uses a periodic inventory system and believes there are 34 birds remaining in ending inventory. However, Sylvester neglects to make a final inventory count at the end of the year. An employee accidentally left one of the cages open one night and 10 birds flew away, leaving only 24 birds in ending inventory. Sylvester is not aware of the lost canaries 3. What effect will the inventory error have on and (d) net income (ignoring…arrow_forwardI need help calculating the ending inventory and cost of goods sold using the LIFO method (Please Show Calculations) Note: I also attached an example of what the LIFO chart should look like, please follow that example to answer this question. Jensen Company had the following transactions regarding their inventory, They use a perpetual inventory system. Beginning Inventory: 100 units @ $6.00 per unit First Purchase: 100 units @ $7.00 per unit Sale: 150 units @ $15.00 per unit Second Purchase: 150 units @ $8.00 per unit Sale: 150 units @ $15.00 per unitarrow_forward
- Sport Box sells a wide variety of sporting equipment. The following is information on the purchases and sales of their top selling hockey stick. The hockey stick sells for $130. Description Mar. 1 Beginning Inventory Mar. 3 Purchase Mar. 6 Purchase Mar. 17 Sale Mar. 23 Purchase Mar. 31 Sale 1. FIFO Units. 19 64 114 59 58 148 2. Moving weighted average Required: Calculate the cost of goods sold and ending inventory under the perpetual inventory system using the following methods. (Do not round your "Unit Cost" answers. Round all other intermediate and final answers to nearest whole dollar.) Unit Cost $44 $49 $54 Cost of Goods Sold $54 Ending Inventory < Prev www 2 of 8 --- Nexarrow_forwardRequired information [The following information applies to the questions displayed below.] Sylvester has a bird shop that sells canaries. Sylvester maintains accurate records on the number of birds purchased from its suppliers and the number sold to customers. The records show the following purchases and sales during 2021. Cost per Unit Date Transactions Units Total Cost Beginning inventory Purchase Purchase $ 28 $1,036 January 1 April 14 August 22 October 29 37 68 30 2,040 3,776 118 32 Purchase 83 34 2,822 306 $9,674 Sales ($48 each) 272 Jan. 1-Dec. 31 Sylvester uses a periodic inventory system and believes there are 34 birds remaining in ending inventory. However, Sylvester neglects to make a final inventory count at the end of the year. An employee accidentally left one of the cages open one night and 10 birds flew away, leaving only 24 birds in ending inventory. Sylvester is not aware of the lost canaries Required: 1. What amount will Sylvester calculate for ending inventory and…arrow_forwardCostume Warehouse sells costumes and accessories. Review the following transactions and prepare the journal entry or entries if Costume Warehouse uses: the perpetual inventory system the periodic inventory system May 3 A customer purchases 45 costumes at a sales price of $35 per costume. The cost to Costume Warehouse per costume is $15. The terms of the sale are 3/15, n/60, with an invoice date of May 3. May 10 The customer who made the May 3 purchase returns 5 of the costumes to the store for a full refund, claiming they were the wrong size. The costumes were returned to Costume Warehouse’s inventory at $15 per costume. May 16 The customer pays in full for the remaining costumes, less the return.arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning