{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Inventory system inventory inventory cost flow

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 6-20 SO 2 SO Inventory Cost Flow Assumptions Inventory Cost Flow Assumptions “First-In-First-Out (FIFO)” Illustration 6-5 6-21 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 “Last-In-First-Out (LIFO)” Seldom coincides with actual physical flow of merchandise. 6-22 Latest goods purchased are first to be sold. Exceptions include goods stored in piles, such as coal or hay. 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 “Last-In-First-Out (LIFO)” Illustration 6-7 6-23 Inventory Cost Flow Assumptions Inventory Cost Flow Assumptions “Last-In-First-Out (LIFO)” Illustration 6-7 6-24 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 “Average-Cost” Assumes goods are similar in nature. 6-25 Allocates cost of goods available for sale on the basis of weighted-average unit cost incurred. Applies weighted-average unit cost to the units on hand to determine cost of the ending inventory. 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 “Average-Cost” 6-26 Illustration 6-10 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 “Average-Cost” 6-27 Illustration 6-10 SO 2 Explain the basis of accounting for inventories and apply the SO inventory cost flow methods under a periodic inventory system. inventory Financial Statement and Tax Effects Financial Statement and Tax Effects Comparative Financial Statement Summary FIFO Average LIFO $9,000 $9,000 $9,000 6,200 6,600 7,000 2,800 2,400 2,000 330 330 330 Income before taxes 2,470 2,070 1,670 Income tax expense 140 120 110 Net income $2,330 $1,950 $1,560 Inventory balance $5,800 $5,400 $5,000 Sales Cost of goods sold Gross profit Admin. & selling expense 6-28 LO 3 Explain the financial statement and tax effects of each LO of the inventory cost flow assumptions. of Financial Statement and Tax Effects Financial Statement and Tax Effects In Period of Rising Prices, FIFO Reports: FIFO Average LIFO $9,000 $9,000 $9,000 6,200 6,600 7,000 2,800 2,400 2,000 330 330 330 Income before taxes 2,470 2,070 1,670 Income tax expense 140 120 110 Net income $2,330 $1,950 $1,560 Inventory balance $5,800 $5,400 $5,000 Sales Lowest Cost of goods sold Gross profit Admin. & selling expense Highest 6-29 LO 3 Explain the financial statemen...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern