Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
5th Edition
ISBN: 9780134078939
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 6, Problem 6.28AP
Accounting for inventory using the perpetual inventory system-FIFO, LIFO, and weighted-average
Athletic Universe began January with merchandise inventory of 65 crates o f vitamins that cost a total of $3,835. During the month, Athletic Universe purchased and sold merchandise o n account as follows:
| Jan. 5 | Purchase | 145 crates @ $ 80 each |
| 13 | Sale | 160 crates @ $ 96 each |
| 18 | Purchase | 170 crates @ $ 90 each |
| 26 | Sale | 175 crates@$ 11 0 each |
Requirements
1. Prepare a perpetual inventory record, using the FIFO inventory costing method, and determine the company’s cost of goods sold, ending merchandise inventor y, and gross profit.
2. Prepare a perpetual inventory record, using the LIFO inventory costing method, and determine the company's cost of goods sold, ending merchandise inventory, and gross profit.
3. Prepare a perpetual inventory record, using the weighted-average inventory costing method, and determine the company’s cost of goods sold, ending merchandise inventory, and gross profit. (Round weighted-average cost per unit to the nearest cent and all other amounts to the nearest dollar.)
4. If the business wanted to pay the least amount of income taxes possible, which method would it choose?
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Required Information
ABC starts a merchandising business on December 1 and enters Into the following three Inventory
purchases. Also, on December 15. ABC sells 25 units for $25 each.
Purchases on December 7
15 units e $18.00 cost
30 units e $15.00 cost
25 units e $18.e0 cost
Purchases on December 14
Purchases on December 21
Required:
ABC sells 25 unlts for $25 each on December 15. ABC uses a perpetual Inventory system. Determine the costs assigned to
ending Inventory when costs are assigned based on the welghted average method. (Round your per unit costs to 2 decimal
places.)
Weighted Average - Perpetual:
Goods purchased
Cost of Goods Sold
Inventory Balance
# of
units
Cost per
unit
Inventory
Value
# of
units
sold
Cost per
unit
Cost of
Goods Sold
Cost per
unit
Inventory
Balance
Date
# of units
December 7
S 0.00
December 14
S 0.00
Average cost
0.00
December 15
S 0.00
December 21
S 0.00
Average cost
Totals
S 0.00
Required Information
ABC starts a merchandising business on December 1 and enters Into the following three Inventory
purchases. Also, on December 15, ABC sells 25 units for $25 each.
Purchases on December 7
15 units e $18.00 cost
30 units e $15.ee cost
25 units e $18.00 cost
Purchases on December 14
Purchases on December 21
Requlred:
ABC sells 25 unlts for $25 each on December 15. ABC uses a perpetual Inventory system. Determine the costs assigned to
the December 31 ending Inventory when costs are assigned based on LIFO.
Perpetual LIFO:
Goods purchased
Cost of Goods Sold
Inventory Balance
# of
Cost per Cost of Goods
# of
units
Cost per
unit
Cost of Goods
Available for
Sale
Cost per
unit
Inventory
Balance
Date
units
sold
# of units
unit
Sold
December 7
December 14
December 15
December 21
Totals
Required information
Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases.
Also, on December 15, Monson sells 25 units for $25 each.
Purchases on December 7
Purchases on December 14
Purchases on December 21
15 units @ $1.00 cost
30 units ē $15.00 cost
25 units @ $18.00 cost
Required:
Monson uses a perpetual inventory system. Determine the costs assigned to the December 31 ending inventory based on the FIFO
method.
Perpetual FIFO:
Goods Purchased
Cost of Goods Sold
# of
Units
Sold
Inventory Balance
# of
Units
Cost Per
Unit
Goods
Purchased
Cost Per Cost of Goods
Unit
# of Units Cost Per
Unit
Inventory
Balance
Date
Sold
December 7
December
14
Chapter 6 Solutions
Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
Ch. 6 - Which principle or concept states that businesses...Ch. 6 - Which inventory costing method assigns to ending...Ch. 6 - Assume Nile.com began April with 14 units of...Ch. 6 - Suppose Nile.com used the weighted-average...Ch. 6 - Which inventory costing method results in the...Ch. 6 - Prob. 6QCCh. 6 - At December 31, 2016, Stevenson Company overstated...Ch. 6 - Suppose Maestros had cost of goods sold during the...Ch. 6 - Suppose Nile.com used the LIFO inventory costing...Ch. 6 - Prob. 1RQ
Ch. 6 - Prob. 2RQCh. 6 - Prob. 3RQCh. 6 - What is the goal of conservatism?Ch. 6 - Prob. 5RQCh. 6 - Under a perpetual inventory system, what are the...Ch. 6 - Prob. 7RQCh. 6 - Prob. 8RQCh. 6 - What does the lower-of-cost-or-market (LCM) rule...Ch. 6 - What account is debited when recording the...Ch. 6 - What is the effect on cost of goods sold, gross...Ch. 6 - When does an inventory error cancel out, and why?Ch. 6 - Prob. 13RQCh. 6 - Prob. 14RQCh. 6 - Prob. 15ARQCh. 6 - Prob. 16ARQCh. 6 - Determining inventory accounting principles Ward...Ch. 6 - Determining inventory costing methods Ward Hard...Ch. 6 - Use the following information to answer Short...Ch. 6 - Use the following information to answer Short...Ch. 6 - Use the following information to answer Short...Ch. 6 - Use the following information to answer Short...Ch. 6 - Comparing Cost of Goods Sold under FIFO, UFO, and...Ch. 6 - Applying the lower-of-cost-or-market rule Assume...Ch. 6 - Determining the effect of an inventory error...Ch. 6 - Computing the rate of inventory turnover and days...Ch. 6 - Use the following information to answer Short...Ch. 6 - Prob. 6.12SECh. 6 - Prob. 6.13SECh. 6 - Using accounting vocabulary Match the accounting...Ch. 6 - Comparing inventory methods Zippy, a regional...Ch. 6 - Prob. 6.16ECh. 6 - Use the following information to answer Exercises...Ch. 6 - Use the following information to answer Exercises...Ch. 6 - Comparing amounts for cost of goods sold, ending...Ch. 6 - Comparing cost of goods sold and gross...Ch. 6 - Prob. 6.21ECh. 6 - Prob. 6.22ECh. 6 - Prob. 6.23ECh. 6 - Prob. 6.24ECh. 6 - Prob. 6.25ECh. 6 - Prob. 6.26ECh. 6 - Prob. 6.27ECh. 6 - Accounting for inventory using the perpetual...Ch. 6 - Accounting for inventory using the perpetual...Ch. 6 - Prob. 6.30APCh. 6 - Correcting inventory errors over a three-year...Ch. 6 - Accounting for inventory using the periodic...Ch. 6 - Accounting for inventory using the perpetual...Ch. 6 - Prob. 6.34BPCh. 6 - Prob. 6.35BPCh. 6 - Prob. 6.36BPCh. 6 - Prob. 6.37BPCh. 6 - Prob. 6.38CPCh. 6 - Accounting for inventory using the perpetual...Ch. 6 - Suppose you manage Campbell Appliance. The stores...Ch. 6 - Ever since he was a kid, Carl Montague wanted to...Ch. 6 - The notes are an important part of a companys...
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