lower-of-cost-or-market‚ inventory turnover‚ days? sales in inventory‚ and LIFO reserve. 2. Know how to compute the cost of ending inventory and the cost of merchandise sold using FIFO‚ LIFO‚ and average cost. 3. What is the cost of merchandise available for sale? 4. Know the effect on cost of ending inventory and cost of merchandise sold when using FIFO‚ LIFO‚ and average cost when prices are increasing. Which one‚ FIFO or LIFO‚ gives the higher cost of merchandise sold and which one the
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E7-2 (Determine Cash Balance) Presented below are a number of independent situations. Instructions For each individual situation‚ determine the amount that should be reported as cash. If the item(s) is not reported as cash‚ explain the rationale. 1. Checking account balance $925‚000; certificate of deposit $1‚400‚000; cash advance to subsidiary of $980‚000; utility deposit paid to gas company $180. 2. Checking account balance $600‚000; an overdraft in special checking account at same bank as normal
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1‚ 2‚ 3 Concepts for Analysis 1‚ 2‚ 3‚ 5‚ 11 2. 3. 4. 5. 2 9‚ 13‚ 14‚ 17 7‚ 8 2‚ 3‚ 4‚ 5‚ 10‚ 11‚ 12 13‚ 14‚ 15‚ 16‚ 17‚ 18‚ 19‚ 20‚ 21‚ 22 18 4‚ 5‚ 6 3 2 1‚ 4‚ 5‚ 6‚ 7 5‚ 6‚ 7‚ 8 4 6. 7. Inventory accounting changes. Dollar-value LIFO methods. 14‚ 15‚ 17‚ 18‚ 19 8‚ 9 7 1‚ 8‚ 9‚ 10‚ 11 6‚ 7‚ 10 8‚ 9 23‚ 24‚ 25‚ 26 8-1 ASSIGNMENT CLASSIFICATION TABLE (BY LEARNING OBJECTIVE) Learning Objectives 1. 2. 3. 4. 5. Identify major classifications of inventory. Distinguish
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from LIFO TO FIFO it might be possible to maintain earning growth in 2008. He prepaid a memo to president explain how inventory flow assumption work and provides per forma income statement that show for one product adopting FIFO would allow Merrimack to report higher income in 2008 than it did in 2007 but higher income taxes would have to be paid. First Objective: The first objective in this case is to exposed students to different methods of inventory valuation. Students must know about LIFO and
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Case 3-6 Accounting Standards A. Given the income statement effects of LIFO versus FIFO‚ how will the balance sheet inventory amounts differ between General Motors and Ford versus Honda and Daimler-Benz? In other words‚ will inventory be reported amounts representing recent costs or older historical costs? In your opinion‚ which balance sheet amounts would be more useful to financial statement users in making decisions to buy or sell shares of a company’s stock? Inventory is an asset that
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Chapter 3 Overview of Accounting Analysis 1 Preliminary Topics • Institutional Framework of Financial Reporting includes: (1) Income Statement‚ (2) Balance Sheet and (3) Cash Flow Statement. Balance Sheet analysis: Building Blocks of assets‚ liability‚ debt & equity. Equity=Assetsliability. Book value vs. market value of share. • Corporate financial report is prepared on accrual basis rather than cash basis. Accrual implies economic activities rather than true payment and receipts. • A Responsibility
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following cost flow methods: 1. First-in‚ first-out (FIFO) 2. Last-in‚ last-out (LIFO) 3. Average cost E8-14 Altira uses a perpetual inventory system. Determine the inventory balance Altira would report in its August 31‚ 2011‚ balance sheet and the cost of goods sold it would report in its August 2011 income statement using each of the following cost flow methods: 1. FIFO: 2. LIFO: 3. Average cost E8-18 1. Steelcase adjusts the LIFO reserve at the end
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(20–25 minutes) (a) (1) LIFO 600 @ $6.00 = $3‚600 100 @ $6.08 = 608 $4‚208 (2) Average cost Total cost = $33‚655* = $6.35 average cost per unit Total units 5‚300 700 @ $6.35 = $4‚445 EXERCISE 8-14 (Continued) *Units Price Total Cost 600 @ $6.00 = $ 3‚600 1‚500 @ $6.08 = 9‚120 800 @ $6.40 = 5‚120 1‚200 @ $6.50 = 7‚800 700 @ $6.60 = 4‚620 500 @ $6.79 = 3‚395 5‚300 $33‚655 (b) (1) FIFO 500 @ $6.79 = $3‚395
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transactions are related to Parashanlal Merchandizing Company. Income Tax is 10%; operating expenses are Rps 10‚000. Compute Net Income‚ and calculate the value of inventory remaining at the end of the month using the following methods: 1 LIFO 2 FIFO 3 Weighted Average Method No. | Date | Particulars | 01 | Jan 01 | Rps 100‚000 worth of inventory remaining from last years‚ which was bought at Rps 50 per KG. | 02 | Jan 01 | Bought 3000 Kg at Rps 60 per kg. | 03 | Jan 02 | Bought
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counterproductive in 2009‚ as the prices continue to rise. What approach (FIFO or LIFO) and why would you recommend to Merrimack Mowers if inventory purchase prices and transportation costs had been stable of falling over the two-year period? (For example‚ if Merrimack were a computer assembly firm). Considering available options it can be seen that the business will become unviable right from 2008 onwards. Hence the company should move to FIFO method of accounting for inventory. This move though has to be
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