Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 8, Problem 8.9BE
LIFO method
• LO8–4
AAA Hardware uses the LIFO method to value its inventory. Inventory at the beginning of the year consisted of 10,000 units of the company’s one product. These units cost $15 each. During the year, 60,000 units were purchased at a cost of $18 each and 64,000 units were sold. Near the end of the fiscal year, management is considering the purchase of an additional 5,000 units at $18. What would be the effect of this purchase on income before income taxes? Would your answer be the same if the company used FIFO instead of LIFO?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
10
Management of Inventory
9.22
(1) What is the total annual cost of the existing inventory policy?
(ii) How much money would be saved by employing the economic order quantity (EOQ) ?
[Ans. (1) 65,063 (including cost of boxes); (ii) 62.50 or say 63]
8. Ace Ltd. Manufactures a product and the following particulars are collected for the year ended
March, 2011:
1000 Units
Monthly demand
*100
$ Cost of placing an order
15 per unit
Annual carring cost
50 units per weak
Normal usage
25 units per week
Minimum usage
Maximum usage
75 units per week
4-6 weeks
Re-order period
You are required to calculate :
(i) Re-order quantity
) Re-order level
(iii) Minimum level
(iv) Maximum level
(v) Average stock level.
[Ans. (i) 186 units, (ii) 450 units; (iii) 200 units; (iv) 536 units; (v) 368 units, or 293 units]
i need the answer quickly
Chapter 8 Solutions
Intermediate Accounting
Ch. 8 - Describe the three types of inventory of a...Ch. 8 - What is the main difference between a perpetual...Ch. 8 - The Cloud Company employs a perpetual inventory...Ch. 8 - The Bockner Company shipped merchandise to Laetner...Ch. 8 - What is a consignment arrangement? Explain the...Ch. 8 - Prob. 8.6QCh. 8 - The Esquire Company employs a periodic inventory...Ch. 8 - Prob. 8.8QCh. 8 - Its common in the electronics industry for unit...Ch. 8 - Explain why proponents of LIFO argue that it...
Ch. 8 - Prob. 8.11QCh. 8 - Describe the ratios used by financial analysts to...Ch. 8 - Prob. 8.13QCh. 8 - Prob. 8.14QCh. 8 - The Austin Company uses the dollar-value LIFO...Ch. 8 - Identify any differences between U.S. GAAP and...Ch. 8 - Determining ending inventory; periodic system ...Ch. 8 - Prob. 8.2BECh. 8 - Prob. 8.3BECh. 8 - Purchas e discounts; gross method LO83 On...Ch. 8 - Prob. 8.5BECh. 8 - Prob. 8.6BECh. 8 - Inventor y cost flow methods; perpetual system ...Ch. 8 - LIFO method LO84 Esquire Inc. uses the LIFO...Ch. 8 - LIFO method LO84 AAA Hardware uses the LIFO...Ch. 8 - LIFO liquidation LO86 Refer to the situation...Ch. 8 - Prob. 8.11BECh. 8 - Ratio analysis LO87 Selected financial statement...Ch. 8 - Dollar-value LIFO LO88 At the beginning of 2018,...Ch. 8 - Perpetual inventory system; journal entries LO81...Ch. 8 - Prob. 8.2ECh. 8 - Determining cost of goods sold; periodic inventory...Ch. 8 - Perpetual and periodic inventory systems compared ...Ch. 8 - Prob. 8.6ECh. 8 - Goods in transit; consignment LO82 The December...Ch. 8 - Physical quantities and costs included in...Ch. 8 - Prob. 8.9ECh. 8 - Prob. 8.10ECh. 8 - Prob. 8.11ECh. 8 - FASB codification research LO82, LO83 Access the...Ch. 8 - Inventory cost flow methods; periodic system ...Ch. 8 - Inventory cost flow methods; perpetual system ...Ch. 8 - Comparison of FIFO and LIFO; periodic system ...Ch. 8 - Average cost method; periodic and perpetual...Ch. 8 - FIFO, LIFO, and average cost methods LO81, LO84...Ch. 8 - Supplemental LIFO disclosures; LIFO reserve; AEP...Ch. 8 - LIFO liquidation LO81, LO84, LO86 The Reuschel...Ch. 8 - Dollar-value LIFO LO88 On January 1, 2018, the...Ch. 8 - Dollar-value LIFO LO88 Mercury Company has only...Ch. 8 - Dollar-value LIFO LO88 Carswell Electronics...Ch. 8 - Concepts; terminology LO81 through LO85 Listed...Ch. 8 - Various inventory transactions; journal entries ...Ch. 8 - Prob. 8.2PCh. 8 - Prob. 8.4PCh. 8 - Various inventory costing methods LO81, LO84...Ch. 8 - Various inventory costing methods LO81, LO84...Ch. 8 - Supple mental LIFO disclosures; Caterpillar LO84,...Ch. 8 - LIFO liquidation LO84, LO86 Taylor Corporation...Ch. 8 - LIFO liquidation LO84, LO86 Cansela Corporation...Ch. 8 - Prob. 8.11PCh. 8 - Integrating problem; inventories and accounts...Ch. 8 - Dollar-value LIFO LO88 On January 1, 2018, the...Ch. 8 - Dollar-value LIFO LO88 Kingston Company uses the...Ch. 8 - Dollar-value LIFO LO88 On January 1, 2018,...Ch. 8 - Prob. 8.1BYPCh. 8 - Real World Case 82 Physical quantities and costs...Ch. 8 - Judgment Case 83 The specific identification...Ch. 8 - Prob. 8.4BYPCh. 8 - Prob. 8.5BYPCh. 8 - Judgment Case 86 Goods in transit LO82 At the end...Ch. 8 - Ethics Case 87 Profit manipulation LO84 In 2017...Ch. 8 - Real World Case 88 Effects of inventory valuation...Ch. 8 - Real World Case 89 Effects of inventory valuation...Ch. 8 - Communication Case 810 Dollar-value LIFO method ...Ch. 8 - Prob. 8.11BYPCh. 8 - Prob. 8.CCTCCh. 8 - Prob. CCIFRS
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- PROBLEM 10 The inventory of Juan Company on December 31, 2020, consists of the following items: Inventory No. Quantity Cost per Unit NRV A1001* 1,000 4,100 P56 P6 A1005 61 59 A1010 500 98 85 A1014 1,200 15 16 A1021 37 3,250 750 35 A1022 20 26 A1030 1,350 39 35 *Inventory A1001 is slow-moving and was acquired four years ago. It will be sold as scrap with a realizable value of P6.00 Requirement: 1. Determine the valuation of the inventory as of December 31, 2020.arrow_forwardQuestion attached in screenshot thanks 4309i349i3493 4 44 3arrow_forwardExercise 8-15 (Algo) LIFO; perpetual system [LO8-1, 8-4] Altira Corporation provides the following information related to its inventory during the month of August 2024: August 1 Inventory on hand-3,600 units; cost $7.70 each. August 8 Purchased 18,000 units for $7.10 each. August 14 Sold 14,400 units for $13.60 each. August 18 Purchased 10,800 units for $6.60 each. August 25 Sold 13,400 units for $12.60 each. August 28 Purchased 5,600 units for $5.80 each. August 31 Inventory on hand-10, 200 units. Using calculations based on a perpetual inventory system, determine the inventory balance Altira would report in its August 31, 2024, balance sheet and the cost of goods sold it would report in its August 2024 income statement using last-in, first-out (LIFO). Perpetual LIFO: Beginning Inventory Purchases: August 8 August 18 August 28 Total Cost of Goods Available for Sale Cost per unit 3,600 $7.70 $ Number of units 18,000 7.10 10,800 6.60 5,600 5.80 38,000 Cost of Goods Available for Sale $…arrow_forward
- Sh6arrow_forward9arrow_forwardQUESTION 10 Niles Inc. took a physical inventory at the end of the year and determined that $414,000 of goods were on hand. Niles determined that $17,000 of goods held and included in the court were being held on consignment from XYZ outlet. Additionally, because of high rates of return on some products, Niles has established an estimate of items that will be returned of $12,000. What amount should Niles report in their year-end balance sheet for the inventory account? O $443,000 $414,000 $409,000 $385,000arrow_forward
- Please do not give solution in image format thankuarrow_forwardProblem 4 VisludsoVallpara reenten & Toy dohr 3 otal anafacturing Company Sold 12 HYZEL Manufacturing Company sold 12,000 units of Product RR in 2020. It expects to increase its sales volume by 10% next year. The inventory data of Product RR is as follows: b Beginning inventory (actual) Ending inventory (estimates) 3,000 units antaybod 4,500 units alq orgue S Required: Determine the number of units that must be produced by HYZEL Manufacturing pala smeruibom Company. nalq must-noris OUTCOMES Jounos ymaisghod #sgbud boxi d narrow_forwardWhat is the correct answer to question 1 and 2? Provide solution.arrow_forward
- Problem 8-15 (Algo) Dollar-value LIFO [LOB-8] On January 1, 2024, a company adopted the dollar-value LIFO inventory method. The inventory value for its one inventory pool on this date was $270,000. An internally generated cost index is used to convert ending inventory to bese year. Year-end Inventories at year- end costs and cost indexes for its one inventory pool were as follows: Year Ended December 31 2024 2025 2026 Inventory Year- Cost Index (Relative End Costs $354,640 365,040 413,110 141,840 to Base Year) 1.04 1.08 1.09 Required: Calculate inventory amounts at the end of each year Note: Round intermediate calculations and final answers to the nearest whole dollars. Date Inventory Layers Converted to Base Year Cost Inventory at Year-End Inventory Cost Index Layers at Base Year Cost Year-End Cost 01012024 12/31/2024 12012025 12012026 Inventory Layers Converted to Cost Inventory DVL Cost Inventory Layers at Year- Inventory End Cost Layers Converted to Cost Index Cost Base 2024 Base…arrow_forwardDollar-Value LIFO A company adopted the LIFO method when its inventory was 1,800. One year later its ending inventory was 2,100, and costs had increased 5% during the year. Required: What is the ending inventory using dollar-value LIFO? Round to the nearest dollar.arrow_forwardPROBLEM 2 Buenaflor Bed and Bath uses a continuous review inventory system for a particular brand and size of organic material. A bag of this organic material costs P110.00. It operates 365 days a year and uses 5,000 bags per year on a continuous basis. The cost of ordering is P50.00 per order and the cost of carrying per bag is P3. It takes 14 days to receive a shipment after an order is placed. Required: 1. What is the EOQ? Round your answer to whole number. Example 100. 2. If EOQ is used, how many orders should be placed per year? Round your answer to two decimal places. Example 100.05 3. What is the reorder point? Round your answer to whole number. Example 100. 4. If the firm wishes to hold 10 days' usage in inventory as safety stock, compute the reorder point. Round your answer to whole number. Example 100.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
The ACCOUNTING EQUATION For BEGINNERS; Author: Accounting Stuff;https://www.youtube.com/watch?v=56xscQ4viWE;License: Standard Youtube License