Com plc bought 500 items of inventory at the price of $20 per item on 1 January 20X2, and another 200 items at the price of $25 per item on 1 July 20X2. On 31 December 20X2, the replacement cost was $30 per item. On that date, Com plc sold 600 items and reported a profit of $9,100 using the first-in-first-out (FIFO) method to calculate the cost of sales. What would the profit be under replacement cost accounting? a. $6,000 b. $4,200 c. $3,200 d. $11,500 e. $12,500 f. $3,600
Com plc bought 500 items of inventory at the price of $20 per item on 1 January 20X2, and another 200 items at the price of $25 per item on 1 July 20X2. On 31 December 20X2, the replacement cost was $30 per item. On that date, Com plc sold 600 items and reported a profit of $9,100 using the first-in-first-out (FIFO) method to calculate the cost of sales. What would the profit be under replacement cost accounting? a. $6,000 b. $4,200 c. $3,200 d. $11,500 e. $12,500 f. $3,600
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter7: Inventories: Cost Measurement And Flow Assumptions
Section: Chapter Questions
Problem 3RE: Reid Company uses the periodic inventory system. On January 1, it had an inventory balance of...
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Question
Com plc bought 500 items of inventory at the price of $20 per item on 1 January 20X2, and another 200 items at the price of $25 per item on 1 July 20X2.
On 31 December 20X2, the replacement cost was $30 per item. On that date, Com plc sold 600 items and reported a profit of $9,100 using the first-in-first-out (FIFO) method to calculate the cost of sales.
What would the profit be under replacement cost accounting?
a. $6,000
b. $4,200
c. $3,200
d. $11,500
e. $12,500
f. $3,600
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