E6 3 on december 1 bargain electronics ltd has three

Info icon This preview shows pages 35–37. Sign up to view the full content.

View Full Document Right Arrow Icon
E6-3 On December 1, Bargain Electronics Ltd. has three DVD players left in stock. All are identical, all are priced to sell at $150. One of the three DVD players left in stock, with serial #1012, was purchased on June 1 at a cost of $100. Another, with serial #1045, was purchased on November 1 for $90.The last player, serial #1056, was purchased on November 30 for $80. Instructions (a) Calculate the cost of goods sold using the FIFO periodic inventory method assuming that two of the three players were sold by the end of December, Bargain Electronic’s year-end. (b) If Bargain Electronics used the specific identification method instead of the FIFO method, how might it alter its earnings by “selectively choosing” which particular players to sell to the two customers? What would Bargain’s cost of goods sold be if the company wished to mini- mize earnings? Maximize earnings? (c) Which of the two inventory methods do you recommend that Bargain use? Explain why. E6-4 Boarders sells a snowboard, Xpert, that is popular with snowboard enthusiasts. Below is information relating to Boarders’s purchases of Xpert snowboards during September. During the same month, 121 Xpert snowboards were sold. Boarders uses a periodic inventory system. 282 Chapter 6 Inventories Determine the correct inventory amount. (SO 1) Calculate cost of goods sold using specific identification and FIFO. (SO 2, 3) Compute inventory and cost of goods sold using FIFO and LIFO. (SO 2) PDF Watermark Remover DEMO : Purchase from to remove the watermark
Image of page 35

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Instructions (a) Compute the ending inventory at September 30 and cost of goods sold using the FIFO and LIFO methods. Prove the amount allocated to cost of goods sold under each method. (b) For both FIFO and LIFO, calculate the sum of ending inventory and cost of goods sold.What do you notice about the answers you found for each method? E6-5 Catlet Co. uses a periodic inventory system. Its records show the following for the month of May, in which 65 units were sold. Exercises 283 Date Explanation Units Unit Cost Total Cost Sept. 1 Inventory 26 $ 97 $ 2,522 Sept. 12 Purchases 45 102 4,590 Sept. 19 Purchases 20 104 2,080 Sept. 26 Purchases 50 105 5,250 Totals 141 $14,442 Units Unit Cost Total Cost May 1 Inventory 30 $ 8 $240 15 Purchases 25 11 275 24 Purchases 35 12 420 Totals 90 $935 Instructions Compute the ending inventory at May 31 and cost of goods sold using the FIFO and LIFO meth- ods. Prove the amount allocated to cost of goods sold under each method. E6-6 Yount Company reports the following for the month of June. Units Unit Cost Total Cost June 1 Inventory 200 $5 $1,000 12 Purchase 300 6 1,800 23 Purchase 500 7 3,500 30 Inventory 120 Instructions (a) Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO and (2) LIFO. (b) Which costing method gives the higher ending inventory? Why?
Image of page 36
Image of page 37
This is the end of the preview. Sign up to access the rest of the 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