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# Quantities determining ownership of goods consigned

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Unformatted text preview: y although ownership of the goods is retained by another party. 6-11 SO 1 Describe the steps in determining inventory quantities. \$ 6-12 Inventory Costing Inventory Costing Unit costs can be applied to quantities on hand using the following costing methods: Specific Identification First-in, first-out (FIFO) Last-in, first-out (LIFO) Cost Flow Assumptions Average-cost 6-13 SO 2 Explain the basis of accounting for inventories and apply the SO inventory cost flow methods under a periodic inventory system. inventory Inventory Costing Inventory Costing Illustration: Assume that Crivitz TV Company purchases three identical 50-inch TVs on different dates at costs of \$700, \$750, and \$800. During the year Crivitz sold two sets at \$1,200 each. These facts are summarized below. Illustration 6-2 6-14 SO 2 Explain the basis of accounting for inventories and apply the SO inventory cost flow methods under a periodic inventory system. inventory Inventory Costing Inventory Costing “Specific Identification” If Crivitz sold the TVs it purchased on February 3 and May 22, then its cost of goods sold is \$1,500 (\$700 + \$800), and its ending inventory is \$750. Illustration 6-3 6-15 SO 2 Explain the basis of accounting for inventories and apply the SO inventory cost flow methods under a periodic inventory system. inventory Inventory Costing Inventory Costing “Specific Identification” Actual physical flow costing method in which items still in inventory are specifically costed to arrive at the total cost of the ending inventory. Practice is relatively rare. Most companies make assumptions (Cost Flow Assumptions) about which units were sold. 6-16 SO 2 Explain the basis of accounting for inventories and apply the SO inventory cost flow methods under a periodic inventory system. inventory Inventory Costing Inventory Costing Cost Flow Assumption does not need to equal Physical Movement of Goods Illustration 6-11 Use of cost flow methods in major U.S. companies 6-17 SO 2 Explain the basis of accounting for inventories and apply the SO inventory cost flow methods under a periodic inventory system. inventory Inventory Cost Flow Assumptions Inventory Cost Flow Assumptions Illustration: Data for Houston Electronics’ Astro condensers. Illustration 6-4 (Beginning Inventory + Purchases) - Ending Inventory = Cost of Goods Sold 6-18 SO 2 Explain the basis of accounting for inventories and apply the SO inventory cost flow methods under a periodic inventory system. inventory Inventory Cost Flow Assumptions Inventory Cost Flow Assumptions “First-In-First-Out (FIFO)” Often parallels actual physical flow of merchandise. 6-19 Earliest goods purchased are first to be sold. Generally good business practice to sell oldest units first. SO 2 Explain the basis of accounting for inventories and apply the SO inventory cost flow methods under a periodic inventory system. inventory Inventory Cost Flow Assumptions Inventory Cost Flow Assumptions “First-In-First-Out (FIFO)” Illustration 6-5...
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