ACT3391Spring2011handoutCH8&amp;9

# ACT3391Spring2011handoutCH8&amp;9 - Notes related to...

This preview shows pages 1–4. Sign up to view the full content.

Notes related to Chapter 8 A firm can use any combination of inventory costing methods – FIFO, LIFO, average, specific identification. Example problem 1 . McEwen sells stereos. The beginning inventory, sales, and purchases of the Bigbox model during the month of May follow: Number of units Cost per unit Selling price per unit Inventory May 1 0 Purchase, May 2 3 \$610 Sale, May 4 2 \$1,000 Purchase, May 6 5 \$620 Purchase, May 7 9 \$650 Sale, May 9 7 \$1,000 Sale, May 10 4 \$1,000 Purchase, May 15 5 \$660 Sale, May 22 2 \$1,000 Sale, May 30 1 \$1,150 Determine the cost of McEwen’s ending inventory as of May 31 and McEwen’s May COGS under each of the following methods: (1) FIFO periodic (2) FIFO perpetual (3) LIFO periodic (4) LIFO perpetual UNITS DOLLARS BI 0 \$ 0 Purchases 22 14,080 (3 x \$610 + 5 x \$620 + 9 x \$650 + 5 x \$660) Available 22 \$14,080 Sold 16 EI 6 EI FIFO periodic and perpetual (LISH) 5 units @ \$660 = 3,300 1 unit @ \$650 = 650 6 units 3,950 = EI COGS = 14,080 – 3,950 = 10,130 EI LIFO periodic (FISH) 3 units @ \$610 = 1,830 3 units @ \$620 = 1,860 6 units 3,690 = EI COGS = 14,080 – 3,690 = 10,390 EI LIFO perpetual (FISH) 1 unit @ \$610 = 610 3 units @ \$620 = 1,860 2 units @ \$660 = 1,320 6 units 3,790 = EI COGS = 14,080 – 3,790 = 10,290 Example problem 2 . The following facts pertain to the cost of one product carried in the merchandise inventory of the Harris Store: 1

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Inventory on hand, January 1 300 units @ \$25.00 = \$ 7,500 Purchases, January 12 600 units @ \$26.00 = \$15,600 Purchases, January 19 400 units @ \$27.00 = \$10,800 Purchases, January 29 300 units @ \$26.00 = \$ 7,800 \$41,700 Sales, January 4 200 units @ \$50.00 Sales, January 13 500 units @ \$50.00 Sales, January 24 200 units @ \$50.00 Sales January 28 200 units @ \$50,00 Calculate COGS for January AND EI as of 01-31 under each of the following assumptions: Harris uses FIFO Harris uses a periodic average cost system FIFO: EI = LISH = 300 @ \$26.00 = \$ 7,800 200 @ \$27.00 = \$ 5,400 \$13,200 Thus, COGS = \$28,500 Average: \$41,700 / 1,600 = \$26.0625 per unit EI = \$26.0625 x 500 = \$13,031.25 COGS = \$26.0625 x 1,100 = \$28,668.75 \$41,700.00 Example problem 3 . The following facts pertain to the cost of one product carried in the merchandise inventory of the Harris Store: Inventory on hand, January 1 300 units @ \$25.00 = \$ 7,500 Purchases, January 12 600 units @ \$26.00 = \$15,600 Purchases, January 19 400 units @ \$27.00 = \$10,800 Purchases, January 29 300 units @ \$26.00 = \$ 7,800 \$41,700 Sales, January 4 100 units @ \$50.00 Sales, January 13 700 units @ \$50.00 Sales, January 24 300 units @ \$50.00 Sales January 31 100 units @ \$50,00 Calculate COGS for January AND EI as of 01-31 assuming Harris uses periodic LIFO Harris uses perpetual LIFO SOLUTION : LIFO periodic EI = 400 units (FISH) 300 @ \$25 \$ 7,500 100 @ \$26 \$ 2,600 \$10,100 EI 2
\$41,700 - \$10,100 = \$31,600 COGS LIFO perpetual EI = 400 units (FISH) 100 @ \$25 \$ 2,500 100 @ \$27

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

## This note was uploaded on 03/08/2011 for the course ACCT 3391 taught by Professor Turpin during the Spring '10 term at Troy.

### Page1 / 10

ACT3391Spring2011handoutCH8&amp;9 - Notes related to...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online