University of Phoenix Material Accounting Memo interoffice memo to: Accounting Team mate from: Andrew Accountant subject: LIFO FIFO explanation date: 6/10/2015 Team-mate We need to get together later this week—boss has requested we give her an overview of Last In/First Out (LIFO) versus First In/First Out (FIFO) as it might apply to our company. She needs the background info to present to our president and the board late this month. This is to help management make the decision of which inventory
Premium Inventory FIFO and LIFO accounting Balance sheet
FIFO versus LIFO as the cost flow assumption in the accountant’s process of inventory valuation for financial statement reporting to a company’s external stakeholders. FIFO AND LIFO ANALYSIS As shown in the exhibit‚ because the price of LG TV was decreasing‚ Samuel’s Electronics would record less cost of good sold and consequently have greater ending inventory value utilizing LIFO inventory system. The company would generate higher net income and increase the earnings. Also‚ LIFO could reflect
Premium FIFO and LIFO accounting
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 LIFO ($5‚000). (c) The average-cost method uses a weighted-average unit cost‚ not a simple average of unit costs. EXERCISE 6-9 Cost Cameras Minolta Canon Total Light meters Vivitar Kodak Total Total inventory
Premium Inventory FIFO and LIFO accounting Average
Chapter 7 Reporting and Interpreting Cost of Goods Sold and Inventory ANSWERS TO QUESTIONS 1. Inventory often is one of the largest amounts listed under assets on the balance sheet which means that it represents a significant amount of the resources available to the business. The inventory may be excessive in amount‚ which is a needless waste of resources; alternatively it may be too low‚ which may result in lost sales. Therefore‚ for internal users inventory control is very important
Premium Inventory FIFO and LIFO accounting
1(a) Paragon Electronics‚ INC. LIFO Purchases By Paragon Sold to Ending Inventory Cost of goods sold Year Units Unit cost($) Aero Inc Units Unit Cost($) Total($) Unit Unit Cost($) Total($) 1986 100 700 80 20 700 14‚000 80 700 56‚000 1987 100 800 110 10 700 7‚000 100 10 800 700 87‚000 1988 100 850 92 10 8 700 850 7‚000 6‚800 92 850 78‚200 1989 100 750 104 10 4 700 850 7‚000 3‚400 100 4 750 850 78‚400 1990 100 650 94 10 4
Premium Balance sheet Inventory Generally Accepted Accounting Principles
Johnson. (n.d.). Our History. Retrieved from: http://www.jnj.com/connect/about- jnj/company-history/ Mcintosh‚ K. A. (n.d.). ehow What is an Operating Budget?. Retrieved from: http://www.ehow.com/info_7947151_operating-budget.html Peavler‚ R. (n.d.). LIFO and FIFO Inventory Accounting Methods Overview of Two Methods of Accounting for and Tracking Inventory. Retrieved from: http://bizfinance.about.com/od/inventory/a/Inventory_Accounting_LIFO_FIFO.htm
Premium Cost Costs Inventory
Publishing. Inventory Management. R. Anthony Inman. Inventory Management – levels‚ system‚ model‚ type‚ business‚ system‚ what is inventory? http:www.referenceforbusiness.com/management/Int-Loc/Inventory-Management.html LIFO vs. FIFO: Understanding the Difference. Aunindita. LIFO vs. FIFO: Which One is Better for my Business? http://www.brighthub.com/office/finance/articles/81950.aspx Master Budget and Responsibility Accounting. Strayer University. (2008). ACC 350 Cost Accounting 2008 Custom Edition
Premium Inventory Cost Management accounting
totals to euros. b) Compute the cost of the ending inventory on April 30 and May 31 using the FIFO method. In addition‚ determine cost of goods sold for April and May. c) Compute the cost of the ending inventory on April 30 and May 31 using the LIFO method. In addition‚ determine cost of goods sold for April and May. d) Do X´s cash flows from operations for April and May differ depending on which inventory costing method is used? Explain. 2. INVENTORY METHODS a) A company decided to change
Premium Inventory FIFO and LIFO accounting Revenue
Module 6 Reporting and Analyzing Operating Assets DISCUSSION QUESTIONS Q6-1. When a company increases its allowance for uncollectible accounts‚ it also records bad debt expense in the income statement. If a company overestimates the allowance account‚ bad debt expense is too high and net income is understated. As well‚ accounts receivable (net of the allowance account) and total assets are both understated on the balance sheet. In future periods‚ the company will not need to add as much
Premium Inventory Depreciation Balance sheet
purposes may be determined under any one of several assumptions as to the flow of cost factors‚ such as first-in first-out (FIFO)‚ average‚ and last-in first-out (LIFO). The major objective in selecting a method should be to choose the one which‚ under the circumstances‚ most clearly reflects periodic income. May an entity elect LIFO method for inventory cost? IAS 2 Inventories Cost formula 25 The cost of inventories‚ other than those dealt with in paragraph 23‚ shall be assigned by using the
Premium Inventory FIFO and LIFO accounting Generally Accepted Accounting Principles