HW_ 4 Inventory with solution

HW_ 4 Inventory with solution - Homework #4: Inventory (Ch...

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Homework #4 : Inventory (Ch 8 and Ch 9), due on February 24. Problem 1: Caylor Inc. is considering whether or not it should change from a last-in, first-out (LIFO) to first-in, first-out (FIFO) basis of pricing inventories. The following information is available. Sales 20,000 units @ 50 Inventory, Jan 1 5,000 units @ 20 Purchase 6,000 units @ 22 10,000 units @ 25 7,000 units @ 30 Inventory, Dec 31 8,000 units @ ? Operating expense $200,000 Required: 1) Using a periodic method, prepare a condensed income statement for the year on both bases for comparative purposes. 2) Explain whether Caylor should change from LIFO to FIFO?
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Solution to Problem 1: part 1 First-in, first- out Last-in, first-out Sales. ............................................... ......................................................... $1,000,000 $1,000,000 Cost of goods sold: Inventory, Jan. 1. ....................... $100,000 $100,000 Purchases. ................................ 592,000 * 592,000 Cost of goods available. ............ 692,000
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HW_ 4 Inventory with solution - Homework #4: Inventory (Ch...

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