ACCT303 Chapter 9 Homework Solutions[1]

ACCT303 Chapter 9 Homework Solutions[1] - E9-3. Computing...

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1 E9-3. Computing ending inventory under different cost flow assumptions (AICPA adapted) Requirement 1: Cost of goods sold and the cost of ending inventory under the FIFO method are computed below. FIFO FIFO January 12 200 @ $16 $3,200 January 30 100 @ $16 1,600 50 @ $17 850 Units sold 350 Cost of goods sold $5,650 Now we know how many units are no longer in inventory, and we can compute the ending balance from the units remaining. Remaining in ending inventory: FIFO 100 @ $17 $1,700 100 @ $18 1,800 200 Units $3,500 The cost of ending inventory under FIFO is $3,500. We can use the same method to find the cost of ending inventory under LIFO. Requirement 2: LIFO January 12 100 @ $18 $1,800 100 @ $17 1,700 January 30 50 @ $17 850 100 @ $16 1,600 Units sold 350 Cost of goods sold $5,950 Since Kristen’s Office Supplies, Inc., does not use perpetual inventory records, we do not need to worry about the dates of the purchases and sales. LIFO ending inventory: 200 @ $16 = $ 3,200
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Under LIFO, ending inventory is $300 less than it is under FIFO, or $3,200. Requirement 3: Average cost Beginning inventory 300 @ $16 $4,800 Purchase January 14 150 @ $17 2,550 Purchase January 29 100 @ $18 1,800 Units available 550 $9,150 Average cost per unit = $9,150 ÷ 550 units = $16.636 Ending inventory = 200 units @ $16.636 = $ 3,327 Cost of goods sold = 350 units @ $16.636 = $5,823 E9-8. Computing inventory under three flow assumptions (AICPA adapted) Purchases during 2011 were: 1,500 @ $10.00 = $15,000 1,200 @ 10.50 = 12,600 600 @ 11.00 = 6,600 900 @ 11.50 = 10,350 4,200 $44,550 To find ending inventory under each of these methods, we need to compute how many units have been sold. To find this number, we can sum the purchases (4,200 units) and beginning inventory (800 units) to find the units available for sale (5,000). Next, we subtract the units on hand (1,600) from the units available. This figure (3,400) is the number of units that have been sold. Now that we know the number of units sold, we can compute the cost of goods sold under each method. Requirement 1:
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This note was uploaded on 09/30/2011 for the course ACCT 303 taught by Professor Staff during the Spring '11 term at S.F. State.

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ACCT303 Chapter 9 Homework Solutions[1] - E9-3. Computing...

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