# Unit cost or date description quantity selling price

• Notes
• 4
• 60% (5) 3 out of 5 people found this document helpful

This preview shows page 2 - 4 out of 4 pages.

##### We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
The document you are viewing contains questions related to this textbook.
Chapter 26 / Exercise 26-6
Accounting Using Excel for Success
Reeve/Warren
Expert Verified
Unit Cost orDateDescriptionQuantitySelling PriceJune 1Beginning inventory25\$60June 4Purchase8564June 10Sale7090June 11Sale return1090June 18Purchase3568June 18Purchase return568June 25Sale4095June 28Purchase2072Instructions(a)Calculate (i) ending inventory, (ii) cost of goods sold, (iii) gross profit, and (iv) gross profitrate under each of the following methods.(1)LIFO.(2)FIFO.(3)Average-cost.(b)Compare results for the three cost flow assumptions.P6-6CYou are provided with the following information for Martinelli Inc. which uses theperiodic method of accounting for its inventory transactions.Calculate ending inventory,cost of goods sold, gross profit,and gross profit rate under periodic method; compare results.(SO 2, 3)Compare specific identification,FIFO, and LIFO underperiodic method; use cost flowassumption to justify price increase.March 1Beginning inventory 1,500 litres at a cost of 40¢ per litre.March 3Purchased 2,000 litres at a cost of 45¢ per litre.March 5Sold 1,800 litres for 60¢ per litre.March 10Purchased 3,500 litres at a cost of 49¢ per litre.March 20Purchased 2,000 litres at a cost of 55¢ per litre.March 30Sold 4,500 litres for 70¢ per litre.
(SO 2, 3)
##### We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
The document you are viewing contains questions related to this textbook.
Chapter 26 / Exercise 26-6
Accounting Using Excel for Success
Reeve/Warren
Expert Verified
Instructions(a)Prepare partial income statements through gross profit, and calculate the value of ending in-ventory that would be reported on the balance sheet, under each of the following cost flowassumptions.(1)Specific identification method assuming:(i)the March 5 sale consisted of 900 litres from the March 1 beginning inventory and900 litres from the March 3 purchase; and(ii)the March 30 sale consisted of the following number of units sold from beginning in-ventory and each purchase: 400 litres from March 1; 500 litres from March 3; 2,600litres from March 10; 1,000 litres from March 20.(2)FIFO.(3)LIFO.(b)How can companies use a cost flow method to justify price increases? Which cost flowmethod would best support an argument to increase prices?P6-7CThe management of Claire Co. asks your help in determining the comparative effectsof the FIFO and LIFO inventory cost flow methods. For 2010, the accounting records show thefollowing data.Inventory, January 1 (10,000 units)\$ 37,000Cost of 110,000 units purchased479,000Selling price of 90,000 units sold630,000Operating expenses120,000Units purchased consisted of 40,000 units at \$4.20 on May 10; 50,000 units at \$4.40 on August 15;and 20,000 units at \$4.55 on November 20. Income taxes are 30%.Instructions(a)Prepare comparative condensed income statements for 2010 under FIFO and LIFO. (Showcomputations of ending inventory.)(b)Answer the following questions for management.(1)Which inventory cost flow method produces the most meaningful inventory amount forthe balance sheet? Why?(2)Which inventory cost flow method produces the most meaningful net income? Why?(3)Which inventory cost flow method is most likely to approximate actual physical flow ofthe goods? Why?(4)