ch06 - $1,500 March 20 200 $4.75 $950 $2,450 Cost of goods...

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Demonstration Problem Gerald D. Englehart Company has the following inventory, purchases, and sales data for the month of March. Inventory: 1-Mar 200 units @ $4.00 $800 Purchases: 10-Mar 500 units @ $4.50 2,250 20-Mar 400 units @ $4.75 1,900 30-Mar 300 units @ $5.00 1,500 Sales: 15-Mar 500 units 25-Mar 400 units The physical inventory count on March 31 shows 500 units on hand. Instructions under the (a) first-in, first-out (FIFO) method, (b) last-in, first-out (LIFO) method, and (c) average cost method SOLUTION TO DEMONSTRATION PROBLEM The cost of goods available for sale is $6,450, as follows. Inventory: 200 units @ $4.00 $800 Purchases: 10-Mar 500 units @ $4.50 2,250 20-Mar 400 units @ $4.75 1,900 30-Mar 300 units @ $5.00 1,500 Total cost of goods available for sale $6,450 FIFO Method Ending inventory: Unit Total Date Units Cost Cost March 30 300 $5.00
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Unformatted text preview: $1,500 March 20 200 $4.75 $950 $2,450 Cost of goods sold: $6,450 - $2,450 = $4,000 LIFO Method Ending inventory: Unit Total Date Units Cost Cost March 1 200 $4.00 $800 March 10 300 $4.50 $1,350 $2,150 Cost of goods sold: $6,450 - $2,150 = $4,300 Average Cost Method Average unit cost: $6,450 / 1,400 = $4,607 Ending inventory: 500 * $4,607 = $2,303.50 Cost of goods sold: $6,450 - $2,303.50 = $4,146.50 Questions : 1. What is the LIFO reserve for this company ? 2. How would choosing the FIFO method over the LIFO method change the financial statements ? How much ? Under a periodic inventory system determine the cost of inventory on hand at March 31 and the cost of goods sold for March Under the periodic inventory system , the cost of goods sold under each cost flow method is as follows....
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