Week 6 Checkpoint-Computing Inventory Balances and Lower of Cost or Market

Week 6 Checkpoint-Computing Inventory Balances and Lower of Cost or Market

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QUICK STUDY QS 6-1 Assigning costs to inventory— perpetual systems P1 Tevin Trader starts a merchandising business on December 1 and enters into three inventory purchases: December 7 10 units @ $ 6 cost December 14 20 units @ $12 cost December 21 15 units @ $14 cost Trader sells 15 units for $25 each on December 15. Eight of the sold units are from the December 7 purchase and seven are from the December 14 purchase. Trader uses a perpetual inventory system. Determine the costs assigned to the December 31 ending inventory when costs are assigned based on ( a ) FIFO, ( b ) LIFO, ( c ) weighted average, and ( d ) specific identification. (a) FIFO Date Goods Purchased Cost of Goods Sold Inventory Balance Dec. 7 10 @ $6=$60.00 10 @ $6=$60 Dec. 14 20 @ $12=$240 10 @ $6=$60 20 @ $12=$240 =$300 Dec. 15 10 @ $6=$60 5 @ $12=$60=$120 15 @ $12 = $180 Dec. 21 15 @ $14=210 15 @ $12 = $180 15 @ $14 = $210 =$390 Dec. 31 $120 $390 (b) LIFO Date Goods Purchased Cost of Goods Sold Inventory Balance Dec. 7 10 @ $6=$60.00 10 @ $6=$60 Dec. 14 20 @ $12=$240 10 @ $6=$60 20 @ $12=$240 =$300 Dec. 15 15 @ $12=$180 10 @ $6=$60 5 @ $12=$$60 =$120 Dec. 21 15 @ $14=$210 10 @ $6=$60 5 @ $12=$$60 15 @ $14=$210=$330 Dec. 31 $180 $330
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( c ) Weighted Average Date Goods Purchased Cost of Goods Sold Inventory Balance Dec. 7 10 @ $6=$60.00 10 @ $6=$60 Dec. 14 20 @ $12=$240 10 @ $6=$60 20 @ $12=$240 =$300 or $10 per unit Dec. 15 15 @ $10=$150 15 @ $10=$150
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This note was uploaded on 09/06/2010 for the course ACC 225 acc 225 taught by Professor Unknown during the Spring '10 term at University of Phoenix.

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Week 6 Checkpoint-Computing Inventory Balances and Lower of Cost or Market

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