Midterm Notes

Midterm Notes - have an easier time comparing its results...

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Sales – cost of goods sold = gross profit Cost of goods avail. for sale / total units avail. for sale = weighted avg. unit cost C of GS = cost of goods avail. for sale – ending invent. Cost of goods avail. for sale = beginning inventory + purchases Ending invent = units/unit cost Ex. FIFO = 4000x3 + 1000x4 = 16,000 = C of GS LIFO = 5,000x4 = 20,000 = C of GS Avg. Cost = (4000x3 + 6000x4)/10,000 = $3.6 per unit. 5000x3.6 = 18,000 Ex. Pg. 285 1.) The company reports its inventory in three components so that analysts can
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Unformatted text preview: have an easier time comparing its results to those of other companies that might not use the same methods. 2.) The company might use the two methods to account for the phantom profit that would be included if just using FIFO, and avoid understating the ending inventory in LIFO. 3.) a) C of GS/avg. Invent. = 1528131/(287063 +232,877/2) = 6.1 days in invent. = 365/6.1 = 59.8 days...
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