Accounting: What the Numbers Mean
11th Edition
ISBN: 9781259535314
Author: David Marshall, Wayne William McManus, Daniel Viele
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 5, Problem 5.5ME
Mini-Exercise 5.5
LO 7, 8
Cost flow assumptions-FIFO and LIFO using a periodic system Sales during the year were 700 units. Beginning inventory was 400 units at a cost of $10 per unit. Purchase 1 was 500 units at $12 per unit. Purchase 2 was 300 units at $14 per unit.
Required:
Calculate cost of goods sold and ending inventory under the following cost flow assumptions (using a periodic inventory system):
- FIFO
- LIFO
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Students have asked these similar questions
Cost Flow Methods
The following three identical units of Item JC07 are purchased during April:
April 2
April 15
April 20
Total
Average cost per unit
Item Beta
Units
Cost
Purchase
1
$182
Purchase
1
183
Purchase
1
184
3
$549
$183
($5493 units)
Assume that A method of inventory costing in which the cost of the units sold and in ending Inventory is a weighted average of the purchase costs.
(b) last-in, first-out (LIFO); and (c) weighted average cost method.
Gross Profit
Ending Inventory
a. First-in, first-out (FIFO)
b. Last-in, first-out (LIFO)
c. Weighted average cost
$
$
$
Cost Flow Methods
The following three identical units of Item Alpha are purchased during April:
Item Alpha
Apr. 2
14
28
Total
Purchase
Purchase
Purchase
Units
a. First-in, first-out (FIFO)
b. Last-in, first-out (LIFO)
c. Weighted average cost
$
1
$
1
1
$
3
Average cost per unit
Assume that one unit is sold on April 30 for $140.
Determine the gross profit for April and ending inventory on April 30 using the (a) first-in, first-out (FIFO); (b) last-in, first-out (LIFO); and (c) weighted average cost
methods.
Gross Profit
Cost
$112
113
114
$339
$113 ($339 3 units)
Ending Inventory
$
Dec. 1
1,500 units at $29
Dec. 10
750 units at $31
Dec. 12
1,050 units
Dec. 20
675 units at $33
Dec. 14
900 units
Dec. 31
450 units
a. Assuming that the perpetual inventory system is used, costing by the LIFO method, determine the cost of goods sold for each sale and the inventory balance after each sale,
presenting the data in the form illustrated in Exhibit 4. Under LIFO, if units are in inventory at two different costs, enter the units with the HIGHER unit cost first in the Cost of
Goods Sold Unit Cost column and LOWER unit cost first in the Inventory Unit Cost column.
Schedule of Cost of Goods Sold
LIFO Method
Prepaid Cell Phones
Cost of
Cost of
Quantity
Purchases
Purchases Quantity Goods Sold Goods Sold Inventory Inventory Inventory
Total Cost
Purchased
Unit Cost
Sold
Unit Cost
Total Cost
Quantity
Unit Cost Total Cost
Date
Dec. 1
1,500 V
750 V
23,250 V
Dec. 10
31
Dec. 12
Dec. 14
Dec. 20
Dec. 31
Dec. 31 Balances
Chapter 5 Solutions
Accounting: What the Numbers Mean
Ch. 5 - Prob. 5.1MECh. 5 - Prob. 5.2MECh. 5 - Mini-Exercise 5.3 LO 5 Accounts receivable, bad...Ch. 5 - Mini-Exercise 5.4 LO 5 Bad debts...Ch. 5 - Mini-Exercise 5.5 LO 7, 8 Cost flow...Ch. 5 - Mini-Exercise 5.6 LO 7, 8 Cost flow...Ch. 5 - Prob. 5.7ECh. 5 - Prob. 5.8ECh. 5 - Prob. 5.9ECh. 5 - Prob. 5.10E
Ch. 5 - Exercise 5.11 LO 5 Bad debts analysis-Allowance,...Ch. 5 - Exercise 5.12 LO 5 Bad debts analysis-Allowance...Ch. 5 - Exercise 5.13 LO 5 Cash discounts-ROI Annual...Ch. 5 - Prob. 5.14ECh. 5 - Exercise 5.15 LO 6 Notes receivable-interest...Ch. 5 - Exercise 5.16 LO 6 Notes receivable-interest...Ch. 5 - Exercise 5.17 LO 7, 8 LIFO versus FIFO-matching...Ch. 5 - Prob. 5.18ECh. 5 - Prob. 5.19ECh. 5 - Prob. 5.20ECh. 5 - Exercise 5.21 LO 5, 6, 8 Transaction...Ch. 5 - Exercise 5.22 LO 5. 8, 10 Transaction...Ch. 5 - Exercise 5.23 LO 5, 6, 7 Transaction...Ch. 5 - Exercise 5.24 LO 7, 8, 10 Transaction...Ch. 5 - Prob. 5.25PCh. 5 - Prob. 5.26PCh. 5 - Problem 5.27 LO 5 Bad debts analysis-Allowance...Ch. 5 - Problem 5.28 LO 5 Bad debts analysis-Allowance...Ch. 5 - Problem 5.29 LO 5 Analysis of accounts receivable...Ch. 5 - Problem 5.30 LO 5 Analysis of accounts receivable...Ch. 5 - Problem 5.31 LO 7, 8 Cost flow assumptions-FIFO...Ch. 5 - Problem 5.32 LO 7, 8 Cost flow assumptions-FIFO,...Ch. 5 - Prob. 5.33PCh. 5 - Prob. 5.34PCh. 5 - Problem 5.35 LO 7 Effects of inventory errors If...Ch. 5 - Prob. 5.36PCh. 5 - Case 5.37 LO 5, 7, 8 Focus company-accounts...Ch. 5 - Case 5.38
LO 5, 7
Comparative analysis of current...
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