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Lecture 19 Review questions answer key

# Lecture 19 Review questions answer key - Inventory Rays...

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Inventory Ray’s Farm Store recorded the following purchases and sales of fertilizer during the past year: Jan.1 Beginning Inventory 250 cases @ \$23 \$5,750 Feb. 25 Purchased 100 cases @ \$26 2,600 June 15 Purchased 400 cases @ \$28 11,200 Aug. 15 Purchased 100 cases @ \$26 2,600 Oct. 15 Purchased 300 cases @ \$28 8,400 Dec. 15 Purchased 200 cases @ \$30 6,000 Total goods available for sale 1,350 cases \$36,550 Total sales 1,000 cases Dec. 31 Ending Inventory 350 cases 1) Determine the Cost of Goods Sold and Ending Inventory under the three cost-flow assumptions: FIFO, LIFO, and Average Cost. FIFO COGS = 5,750 + 2,600 + 11,200 + 2,600 + 150*28 = 26,350 FIFO Ending Inventory = 6,000 + 150*28 = 10,200 LIFO COGS = 6,000 +8,400 + 2,600 + 11,200 = 28,200 LIFO ending inventory = 5,750 + 2,600 = 8,350 Average cost per unit = 36,550/1,350 = 27.07 Average Cost COGS = 27.07 *1,000 = 27,070 Average Cost ending inventory = 27.07 * 350 = 9,475 Note that under Average Cost assumption, due to rounding errors, the sum of COGS and ending inventory is 36,545, not exact the same as Total goods available for sale (36,550). 2) Calculate the LIFO reserve ending balance on Dec. 31. LIFO reserve = FIFO ending inventory –LIFO ending inventory = 10,200 – 8,350 = 1,850

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High-Low method The company reports the following utility costs for different levels of activity during the first
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Lecture 19 Review questions answer key - Inventory Rays...

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