SSNT8_Invent - Inventories Measurement Inventory Cost Flow...

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Unformatted text preview: Inventories Measurement Inventory Cost Flow Assumptions Specific identification Average cost First-in, first-out (FIFO) Last-in, first-out (LIFO) Specific Cost Identification The specific cost of each inventory item must be known. By selecting specific items from inventory at the time of sale, income can be manipulated. Items are added to inventory at cost when they are purchased. COGS for each sale is based on the specific cost of the item sold. Average Cost Method Periodic average cost uses a weighted-average unit cost: Perpetual average costs uses a moving average cost that is recomputed each time a new purchase is made Weighted average unit cost Cost of goods available for sale Quantity available for sale = / Perpetual Average Cost The following schedule shows the Frame inventory for Yore Frame, Inc. for September. The physical inventory count at September 30 shows 600 frames in ending inventory. Use the perpetual average cost method to determine: (1) Ending inventory cost (2) Cost of goods sold Perpetual Average Cost Date Sales Units 9/1 600 9/10 300 9/30 450 Perpetual Average Cost Date Balance Beg. Inv. 800 x 22.00 = 17,600 17,600.00 $ 1-Sep 600 x 22.000 = 13,200.00 4,400.00 Purchased Sold Perpetual Average Cost Date Balance Beg. Inv. 800 x 22.00 = 17,600 17,600.00 $ 1-Sep 600 x 22.000 = 13,200.00 4,400.00 3-Sep 300 x 24.00 = 7,200 11,600.00 10-Sep 300 x 23.200 = 6,960.00 4,640.00 Purchased Sold $11,600.00 (800-600+300) = $23.200 Perpetual Average Cost $27,490.00 (800-600+300-300+250+200+400) = $26.181 Date Balance Beg. Inv. 800 x 22.00 = 17,600 17,600.00 $ 1-Sep 600 x 22.000 = 13,200.00 4,400.00 3-Sep 300 x 24.00 = 7,200 11,600.00 10-Sep 300 x 23.200 = 6,960.00 4,640.00 15-Sep 250 x 25.00 = 6,250 10,890.00 21-Sep 200 x 27.00 = 5,400 16,290.00 29-Sep 400 x 28.00 = 11,200 27,490.00 30-Sep 450 x 26.181 = 11,781.45 15,708.55 Purchased Sold Perpetual Average Cost Date Balance Beg. Inv. 800 x 22.00 = 17,600 17,600.00 $ 1-Sep 600 x 22.000 = 13,200.00 4,400.00 3-Sep 300 x 24.00 = 7,200 11,600.00 10-Sep 300 x 23.200 = 6,960.00 4,640.00 15-Sep 250 x 25.00 = 6,250 10,890.00 21-Sep 200 x 27.00 = 5,400 16,290.00 29-Sep 400 x 28.00 = 11,200 27,490.00 30-Sep 450 x 26.181 = 11,781.45 15,708.55 Purchased Sold Cost of Goods Sold in September Sale Date Units Cost/Unit Total 9/1 600 22.000 13,200.00 $ 9/10 300 23.200 6,960.00 9/30 450 26.181 11,781.45 Total 1,350 31,941.45 Sum Periodic Average Cost The following schedule shows the Frame inventory for Yore Frame, Inc. for September. The physical inventory count at September 30 shows 600 frames in ending inventory. Use the periodic average cost method to determine: (1) Ending inventory cost (2) Cost of goods sold Periodic Average Cost Yore Frame, Inc....
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SSNT8_Invent - Inventories Measurement Inventory Cost Flow...

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