When costs and prices are rising does lifo or fifo

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1.When costs and prices are rising, does LIFO or FIFO report higher netincome?2.In periods of declining prices, which method are not preferable incometax purposes?B. Workout questionTale Company had the following beginning inventory and purchases during 2002:Item XDateUnit’sUnit costJan. 1Inventory400Br. 14March 10Purchase20015May 9Purchase30016Sep. 22Purchase25020Nov. 28Purchase10021At December 31, 2002, there were 550 units of X on hand.Sales of units were as follows:Jan.15200 units at Br. 30April 1200 units at Br. 30Nov. 1300 units at Br. 35Additional data for use in applying the specific identification method(1) Jan. 15 sale - 200 [email protected] Br. 14(2) April 1 Sale - 200 [email protected] Br. 15(3) Nov. 1 Sale - 200 [email protected] Br. 20Required:a.Calculate the cost of merchandise available for sale21
22b.Apply the four different methods of inventory costing to calculate endinginventory & Cost of merchandise sold under:i)Periodic inventory systemii)Perpetual inventory system1.What is the difference between goods flow and cost flow?2.What are the relative advantages and disadvantages of FIFO and LIFOmethods of inventory costing?3.Why do you think it is more expensive to maintain a perpetualinventory system?4.What are the three most important advantages of the perpetualinventory system?5.A company using a perpetual inventory system sells merchandise to acustomer on account for Br. 1250; the cost of the merchandise was Br. 1000.a)What entries would be made on the general ledger accountsas a result of the transaction?b)What is the amount of gross profit realized from this specificsale?III. Problems1.Eyassu Furniture Company sold 2200 doors during 19 x 5 at Br. 320 per door. Itsbeginning inventory on January 1 was 130 doors at Br. 112. Purchases made during the yearwere as follows:February225 doors @ Br. 124April350 doors @ Br. 130June700 doors @ Br. 140August300 doors @ Br. 132October400 doors @ Br. 136November250 doors @ Br. 144The company's selling and administrative expenses for the year were Br. 202,000, and thecompany uses the periodic inventory system.

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Term
Fall
Professor
FERRELL
Tags
Physical inventory

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