sold……………………………….. 90‚000 Gross profit………………………………………… $60‚000 (15-20 min.) S 6-3 a b c Average Cost FIFO LIFO Cost of goods sold: Average (26 × $154.71) $4‚022.46 FIFO $1‚260 + (17 × $160) $3‚980 LIFO $4‚000 + (1 × $140) $4‚140 Ending inventory: Average (8 × $154.71) $ 1‚237.68 FIFO (8 × $160) $1‚280 LIFO (8 × $140) $1‚120 Computations: Units sold = 26 (9 + 25 − 8) Units in ending inventory = 8 Average cost
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are sold and which remain in inventory creating different accounting methodologies. Only requirement regardless of method used is that total cost of goods sold plus the cost of goods remaining in the ending inventory for financial and tax purposes are equal to the actual cost of goods available. FIFO‚ LIFO‚ and weighted average are come methods used to account for inventory. FIFO assigns first costs incurred to COGS on income statement. LIFO assigns last costs incurred to COGS on the income statement
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(Generally Accepted Accounting Principles). The first approach is first in-first out (FIFO). According to our text FIFO is defined as "the inventory cost-flow assumption that the first cost in inventory are the first costs out to cost of goods sold" (Marshall et al‚ 2004). Typically when dealing with food items FIFO makes that most sense as it reflects the fact that the first food items purchased‚ are the first food items sold. Also typically during times of rising prices the FIFO method will result
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reviewing the company’s accounting records‚ Mr. B has come to know that there has been no consistent stock valuation policy in the past for valuing the company’s stocks. This had lead towards an inappropriate impact on the financial reporting in terms of inconsistent profitability and financial position. He has discussed the matter with the chief accountant – Mr. C who told him that the company is in the process of implementation program of related IASs on various accounting issues. As there has
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comparison to Smelters current FIFO Inventory management system and issued a proposal to change their inventory valuation method from LIFO to FIFO. Factors to Consider Western Aluminum addressed multiple topics to validate their proposal idea. As mentioned above‚ the acquisition of Smelter and its projected out puts is one consideration made. The high-value LIFO layers and commodity price swings has resulted in large non-cash adjustments to Inventory. Switching to FIFO will allow for period end
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Nash-Finch use to account for its inventory? Where did you find this information? If Nash-Finch uses LIFO for some or all of its inventories‚ what do you think motivated management to select this method? Under the inventories footnotes‚ below the financial statements (page 46)‚ Nash-Finch says that 79% of their inventories are valued with LIFO. The additional 21% is calculated using FIFO. By using LIFO‚ Nash-Finch is able to report lower holding inventories by $90.7 million for 2012. Being able to
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Accounting II Assignment 2 Dr. Medhat El Guindy FMI Copy 2015 Adapted by Dr. Heba Wahba CPA — CIA — CMA 01114364363 1 Dr. Heba Wahba EXERCISE 6-8 (a) Cost of Goods Available for Sale $5‚500 ÷ Total Units Available for Sale 900 Ending inventory (100 X $6.11) Cost of goods sold (800 X $6.11) Weighted Average Unit Cost $6.11 = $ 611 4‚889 (b) Ending inventory is lower than FIFO ($700) and higher than LIFO ($500). In contrast‚ cost of goods sold is higher than FIFO ($4‚800) and lower than
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Sagehen Enterprises believes that the company should switch from the LIFO method to the FIFO method. The controllers bonus is based on the next income. It is the controllers belief that the switch in inventory methods would increase the net income of the company. What are the differences between the LIFO and FIFO methods? Week 3 DQ 2 2. A variety of depreciation methods are used to allocate the cost of an asset to all of the accounting periods benefited by the use of the asset. Your client has just
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Retained Earnings: Overstated as net income is overstated. Ending Inventory: Over Stated Write the letter of the method that is most applicable to each statement. a. Specific identification b. Average cost c. First-in‚ first-out (FIFO) d. Last-in‚ first-out (LIFO) ____A___ 1. Is the most realistic ending inventory ____D___ 2. Results in cost of goods sold being closest to current product costs ____C___ 3. Results in highest income during periods of inflation ____C___ 4. Results in highest ending
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Corp. Senior Debenture 1. List all the restrictions imposed on this debenture. The restrictions include dividend restrictions‚ additional debt restriction‚ and indenture modification. 2. Identify all restrictions that are a function of accounting numbers. The dividend restriction will influence the dividend‚ retained earning and equity. Which means the company cannot pay dividend and issue new stock under some certain situation. The additional debt restriction will effect the term
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