This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: Chapter 5: Lower Cost or Market:- Market= replacement cost- Computing the lower of cost or market o Units x Cost OR Market (whichever number is lower) o Computing the lower of cost or market for ending inventory as a whole Sum of Units x Cost or Market- Consistency Principle: have to use same inventory method in each period o Unless an inventory change can occur if it improves your finances Inventory Valuation Methods: FIFO o First In, First Out A company reports the following beginning inventory and purchases for the month of January. On January company sells 360 units.- Units Unit Cost Beginning inventory on January 1 320 $ 6.00 Purchase on January 9 85 6.40 Purchase on January 25 110 6.60 - What is the cost of the 155 units that remain in ending inventory at January 31, assuming costs are assigned perpetual inventory system and use of FIFO?- 360- 320= 40- 85- 40= 45- 45 x 6.4= 288- 110 x 6.6= 726- 726 + 288= 1014 dollars LIFO- Last in, first out A company reports the following beginning inventory and purchases for the month of January. On January 26A company reports the following beginning inventory and purchases for the month of January....
View Full Document
- Fall '08