P6-5a - P6-5A Correct. You are provided with the following...

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Unformatted text preview: P6-5A Correct. You are provided with the following information for Pavey Inc. for the month ended October 31, 2008. Pavey uses a periodic method for inventory. Date Description Units Unit Cost or Selling Price October 1 Beginning inventory 60 $25 October 9 Purchase 120 26 October 11 Sale 100 35 October 17 Purchase 70 27 October 22 Sale 60 40 October 25 Purchase 80 28 October 29 Sale 110 40 Instructions (a) Calculate (i) ending inventory, (ii) cost of goods sold, (iii) gross profit, and (iv) gross profit rate under each of the following methods. (Round weighted-average cost per unit to 3 decimal places, e.g. 2.250. Use the rounded amount for future computations. Round gross profit rate to 1 decimal place, e.g. 10.5 and all other answers to 0 decimal places, e.g. 125.) (1) LIFO. (2) FIFO. (3) Average-cost. Ending inventory Cost of goods sold Gross profit Gross profit rate LIFO $ 1500 $ 7250 $ 3050 29.6 % (b) Compare results for the three cost flow assumptions. What cost flow results in the lowest inventory value. LIFO What cost flow results in the lowest cost of goods sold. FIFO What cost flow results in the lowest gross profit. LIFO What cost flow results in the lowest gross profit rate. LIFO FIFO $ 1680 $ 7070 $ 3230 31.4 % Average Cost $ 1590 $ 7157.7 $ 3142.3 30.5 % ...
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This note was uploaded on 07/31/2011 for the course ACCT 557 taught by Professor Kahn during the Spring '10 term at Strayer.

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P6-5a - P6-5A Correct. You are provided with the following...

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