a Periodic Item Quantity Unit Cost Total Cost Balance 6 100 600 Purchase 1 8

A periodic item quantity unit cost total cost balance

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a. Periodic Item Quantity Unit Cost Total Cost Balance 6 $100 $600 Purchase 1 8 $108 $864 Purchase 2 13 $112 $1456 GAFS 27 $2920 Sold 19 Weighted Ave. Cost/Unit = COGS = Ending Inventory = b. Perpetual (moving average) Perpetual Inventory Record: FIFO Perpetual Inventory Record – Average-cost Date Purchase s Cost of Goods Sold Inventory on Hand Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Mar 1 Mar 7 Mar 11 Mar 19 Mar 28 8 13 $108.00 $112.00 $864.00 $1,456.00 10 9 $104.57 $110.24 $1,046.00 $992.00 6 14 4 17 8 $100.00 $104.57* $104.57 $110.24** $110.24 $600.00 $1,464.00 $418.00 $1,874.00 $882.00 Mar 31 21 $2,320.00 19 $2,038.00 8 $882.00 * ($600.00 + $864.00) / 14 = $104.57 (rounded) ** ($418.00 + $1,456.00)/17 = $110.24 (rounded)
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Dollar Value LIFO (DVL): Most commonly used LIFO method Helps prevent LIFO layer liquidation Ending inventory is based on dollar value versus units Pools based on impact of price changes versus physical similarities of products The steps used in calculating DVL inventory balances : STEP 1: Convert ending inventory valued at year-end cost to base year cost. *ending inventory at current prices / cost index STEP 2: Identify the layers of ending inventory and the years they were created. *ending inventory at base year price – previous year ending inventory at base year price = current year LIFO layer at base year price *A layer is formed only when ending inventory at base-year-prices exceeds the beginning inventory at base-year-prices STEP 3: Convert each layer’s base year cost to layer year cost using the cost index for the year it was acquired. * LIFO layer at base year price x the cost index for that year Step 4: Total the layer year costs to determine the DVL cost of the ending inventory.
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DVL Example 1: The Drake company adopted dollar-value LIFO method on December 31, 2012. The inventory at current prices at the end of 2012 and 2013 was as follows: December 31, 2012 (End of year prices) December 31, 2013 (End of year prices) $40,000 $52,800 The inventory prices were increased by 25% during the year 2013. Required: Compute the amount of inventory at the end of 2013 using dollar-value LIFO method. Solution: 1. compute the value of ending inventory at base-year-prices. 2013 Ending inventory at base-year-prices = $52,800 value at current year prices /1.25 cost index = $42,240 2012 Ending inventory is already at base-year prices since it is the base year = $40,000 2. compute the quantity increase in inventory: = ($42,240 base year value of 2013 ending inventory – $40,000 base year value of 2012 ending inventory) = $2,240 quantity increase valued at base year prices
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  • Fall '08
  • ABOHABIB
  • 1981, 1969, FIFO and LIFO accounting, Periodic Inventory Systems

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