Fundamental Accounting Principles
Fundamental Accounting Principles
24th Edition
ISBN: 9781260158595
Author: Wild
Publisher: MCG
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Chapter 6, Problem 1APSA
To determine

The Number of Ending Inventory Units.

Expert Solution
Check Mark

Explanation of Solution

The ending Inventory units is a difference between units of goods available for sale and units sold and has been computed as under:

    Ending Inventory Units:


    UNITS
    Units available for sale
    820
    Less: Units sold

    Mar-9 Sales
    420
    Mar-29 Sales
    160
    Ending Inventory Units:
    240

Requirement 3-a:

First in First Out:

The first in first out method of assigning the cost to goods sold is based on the principle that the goods that are entered first in the store room shall be issued first for sale and hence the cost shall be recorded at its initial prices of goods entered in store room. The perpetual Inventory system means the records are maintained on a continuous basis.

To determine

The Cost assigned to ending Inventory under FIFO.

Expert Solution
Check Mark

Explanation of Solution

The FIFO method of perpetual inventory suggests that the goods issued for sale on a particular date shall be assigned cost on the basis of cost of oldest material lies in the store on that particular date.

The Ending Inventory shall be computed as under:

    STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL FIFO METHOD

    RECIEPTS
    COST OF GOODS SOLD
    BALANCE
    DATE
    UNITS
    RATE
    AMOUNT $
    UNITS
    RATE
    AMOUNT $
    UNITS
    RATE
    AMOUNT $
    1-Mar






    100
    50
    5000
    5-Mar
    400
    55
    22000



    100
    50
    5000







    400
    55
    22000
    9-Mar



    100
    50
    5000







    320
    55
    17600
    80
    55
    4400
    18-Mar
    120
    60
    7200



    80
    55
    4400







    120
    60
    7200
    25-Mar
    200
    62
    12400



    80
    55
    4400







    120
    60
    7200







    200
    62
    12400
    29-Mar



    80
    55
    4400
    40
    60
    2400




    80
    60
    4800
    200
    62
    12400
    TOTAL
    720

    41600
    580

    31800
    240

    14800

Therefore, Ending Inventory is 240 units of $14800.

Requirement 3-b:

Last in First Out:

The Last in first out method of assigning the cost to goods sold is based on the principle that the goods that are entered recently in the store room shall be issued first for sale and hence the cost shall be recorded at its recent prices of goods entered in store room. The perpetual Inventory system means the records are maintained on a continuous basis.

To determine

The Cost assigned to ending Inventory under LIFO.

Expert Solution
Check Mark

Explanation of Solution

The LIFO method of perpetual inventory suggests that the goods issued for sale on a particular date shall be assigned cost on the basis of cost of newest material lies in the store on that particular date.

The Ending Inventory shall be computed as under:

    STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL LIFO METHOD

    RECIEPTS
    COST OF GOODS SOLD
    BALANCE
    DATE
    UNITS
    RATE
    AMOUNT $
    UNITS
    RATE
    AMOUNT $
    UNITS
    RATE
    AMOUNT $
    1-Mar






    100
    50
    5000
    5-Mar
    400
    55
    22000



    100
    50
    5000







    400
    55
    22000
    9-Mar



    400
    55
    22000







    20
    50
    1000
    80
    50
    4000
    18-Mar
    120
    60
    7200



    80
    50
    4000







    120
    60
    7200
    25-Mar
    200
    62
    12400



    80
    50
    4000







    120
    60
    7200







    200
    62
    12400
    29-Mar



    160
    62
    9920
    80
    50
    4000







    120
    60
    7200







    40
    62
    2480
    TOTAL
    720

    41600
    580

    32920
    240

    13680

Therefore, Ending Inventory is 240 units of $13680.

Requirement 3-c:

Weighted Average:

The Weighted Average method of issuing inventory is based on principle that the goods shall be issued at a average of prices of goods which are lying in the store room at the time of issuing for sale. The perpetual Inventory system means the records are maintained on a continuous basis.

To determine

The Cost assigned to ending Inventory under Weighted average.

Expert Solution
Check Mark

Explanation of Solution

The Weighted Average method of perpetual inventory suggests that the goods issued for sale on a particular date shall be assigned cost on the basis of average cost of material lies in the store on that particular date.

The Ending Inventory shall be computed as under:

    STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL WEIGHTED AVERAGE METHOD

    RECIEPTS
    COST OF GOODS SOLD
    BALANCE
    DATE
    UNITS
    RATE
    AMOUNT $
    UNITS
    RATE
    AMOUNT $
    UNITS
    RATE
    AMOUNT $
    1-Mar






    100
    50
    5000
    5-Mar
    400
    55
    22000



    100
    50
    5000







    400
    55
    22000
    Average






    500
    54
    27000
    9-Mar



    420
    54
    22680
    80
    54
    4320
    18-Mar
    120
    60
    7200



    80
    54
    4320







    120
    60
    7200
    25-Mar
    200
    62
    12400



    80
    54
    4320







    120
    60
    7200







    200
    62
    12400
    Average






    400
    59.8
    23920
    29-Mar



    160
    59.8
    9568
    240
    59.8
    14352
    TOTAL
    720

    41600
    580

    32248
    240
    59.8
    14352

Therefore, Ending Inventory is 240 units of $14,352.

Requirement 3-d:

Specific Identification:

Specific Identification method of assigning the cost to goods sold is based on the principle that the goods that have been issued for sale has been specifically identified to be issued from the particular lot of material. Therefore, the cost of that particular lot shall be assigned on the same. The perpetual Inventory system means the records are maintained on a continuous basis.

To determine

The Cost assigned to ending Inventory under Specific Identification.

Expert Solution
Check Mark

Explanation of Solution

The Specific Identification method of perpetual inventory suggests that the goods issued for sale on a particular date shall be assigned cost on the basis of cost of material specifically identified as issued from the store on that particular date.

The Ending Inventory shall be computed as under:

    STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL SPECIFIC IDENTIFICATION METHOD

    RECIEPTS
    COST OF GOODS SOLD
    BALANCE
    DATE
    UNITS
    RATE
    AMOUNT $
    UNITS
    RATE
    AMOUNT $
    UNITS
    RATE
    AMOUNT $
    1-Mar






    100
    50
    5000
    5-Mar
    400
    55
    22000



    100
    50
    5000







    400
    55
    22000
    9-Mar



    80
    50
    4000
    20
    50
    1000




    340
    55
    18700
    60
    55
    3300
    18-Mar
    120
    60
    7200



    20
    50
    1000







    60
    55
    3300







    120
    60
    7200
    25-Mar
    200
    62
    12400



    20
    50
    1000







    60
    55
    3300







    120
    60
    7200







    200
    62
    12400
    29-Mar



    40
    60
    2400
    20
    50
    1000




    120
    62
    7440
    60
    55
    3300







    80
    60
    4800







    80
    62
    4960
    TOTAL
    720

    41600
    580

    32540
    240

    14060

Therefore, Ending Inventory is 240 units of $14060.

Requirement 4:

Gross Profits:

Gross Profits means excess of sales revenue over the cost of goods sold.

To determine

Gross profits earned by the company under various methods.

Expert Solution
Check Mark

Explanation of Solution

The Gross profits is computed as a difference between the sales revenue and cost of goods sold as assigned under various methods and has been computed as under:

Fundamental Accounting Principles, Chapter 6, Problem 1APSA

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Chapter 6 Solutions

Fundamental Accounting Principles

Ch. 6 - Prob. 11DQCh. 6 - Prob. 12DQCh. 6 - Inventory ownership Homestead Crafts, a...Ch. 6 - QS 6-2 Inventory costs C2 A car dealer acquires a...Ch. 6 - Prob. 3QSCh. 6 - Perpetual: Inventory costing with FIFO P1 A...Ch. 6 - Perpetual: Inventory costing with LIFO Refer to...Ch. 6 - Perpetual Inventory costing with weighted average...Ch. 6 - Periodic: Inventory costing with FIFO P3 Refer to...Ch. 6 - Periodic: Inventory costing with LIFO Refer to the...Ch. 6 - Periodic: Inventory costing with weighted average...Ch. 6 - Perpetual: Assigning costs with FIFO Trey Monson...Ch. 6 - QS6-11 Perpetual Inventory costing with LIFO Refer...Ch. 6 - QS 6-12 Perpetual: Inventory costing with weighted...Ch. 6 - QS6.13 Perpetual Inventory costing with specific...Ch. 6 - Periodic: Inventory costing with FIFO P3 Refer to...Ch. 6 - Periodic Inventory costing with LIFO P3 Refer to...Ch. 6 - Periodic: Inventory costing with weighted average...Ch. 6 - Periodic: Inventory costing with specific...Ch. 6 - QS 6-18 Contrasting inventory costing methods...Ch. 6 - Prob. 19QSCh. 6 - Inventory errors A2 In taking a physical inventory...Ch. 6 - Analyzing inventory A3 Endor Company begins the...Ch. 6 - Prob. 22QSCh. 6 - Inventory costs C2 A solar panel dealer acquires a...Ch. 6 - Exercise 6-1 Inventory ownership C1 1. At...Ch. 6 - Exercise 6-2 Inventory costs C2 Walberg...Ch. 6 - Exercise 6-3 Perpetual Inventory costing methods...Ch. 6 - Exercise 6-4 Perpetual: Income effects of...Ch. 6 - Exercise 6-5A Periodic: Inventory costing P3 Refer...Ch. 6 - Exercise 6-6A Periodic: Income effects of...Ch. 6 - Exercise 6-7 Perpetual Inventory costing...Ch. 6 - Exercise 6.8 Specific identification Refer to the...Ch. 6 - Prob. 9ECh. 6 - Prob. 10ECh. 6 - Prob. 11ECh. 6 - Prob. 12ECh. 6 - Exercise 6-13 Inventory turnover and days' sales...Ch. 6 - Prob. 14ECh. 6 - Prob. 15ECh. 6 - Prob. 16ECh. 6 - Prob. 17ECh. 6 - Exercise 6-1E Perpetual inventory costing P1 Tree...Ch. 6 - Exercise 6-19APeriodic inventory costing P3 I...Ch. 6 - Problem 6-1A Perpetual: Alternative cost...Ch. 6 - Prob. 2APSACh. 6 - Prob. 3APSACh. 6 - Prob. 4APSACh. 6 - Problem 6-5A Lower of cost or market P2 A physical...Ch. 6 - Prob. 6APSACh. 6 - Prob. 7APSACh. 6 - Prob. 8APSACh. 6 - Prob. 9APSACh. 6 - Prob. 10APSACh. 6 - Prob. 1BPSBCh. 6 - Prob. 2BPSBCh. 6 - Prob. 3BPSBCh. 6 - Prob. 4BPSBCh. 6 - Prob. 5BPSBCh. 6 - Prob. 6BPSBCh. 6 - Prob. 7BPSBCh. 6 - Prob. 8BPSBCh. 6 - Prob. 9BPSBCh. 6 - Prob. 10BPSBCh. 6 - Prob. 6SPCh. 6 - AA 6-1 Use Apple's financial statements in...Ch. 6 - AA 6-2 Comparative figures for Apple and Google...Ch. 6 - Prob. 3AACh. 6 - BTN 6-3 Golf Challenge Corp. is a retail sports...Ch. 6 - Prob. 2BTNCh. 6 - Prob. 3BTNCh. 6 - Prob. 4BTNCh. 6 - Prob. 5BTNCh. 6 - Prob. 6BTN
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