ACT3391Spring2011handoutCH8&9

ACT3391Spring2011handoutCH8&9 - Notes related to...

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

View Full Document Right Arrow Icon
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
Background image of page 1

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

View Full DocumentRight Arrow Icon
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
Background image of page 2
$41,700 - $10,100 = $31,600 COGS LIFO perpetual EI = 400 units (FISH) 100 @ $25 $ 2,500 100 @ $27
Background image of page 3

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

View Full DocumentRight Arrow Icon
Image of page 4
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&9 - Notes related to...

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

View Full Document Right Arrow Icon
Ask a homework question - tutors are online