P6 8a vasquez ltdis a retailer operating in uses the

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*P6-8A Vasquez Ltd.is a retailer operating in Edmonton,Alberta.Vasquez uses the perpetual inven- tory method.All sales returns from customers result in the goods being returned to inventory;the in- ventory is not damaged.Assume that there are no credit transactions;all amounts are settled in cash. You are provided with the following information for Vasquez Ltd. for the month of January 2010. Unit Cost or Date Description Quantity Selling Price December 31 Ending inventory 150 $17 January 2 Purchase 100 21 January 6 Sale 150 40 January 9 Sale return 10 40 January 9 Purchase 75 24 January 10 Purchase return 15 24 January 10 Sale 50 45 January 23 Purchase 100 28 January 30 Sale 110 50 Compare specific identification, FIFO and LIFO under periodic method; use cost flow assumption to influence earnings. (SO 2, 3) (a) Gross profit: (1) Maximum $166,750 (2) Minimum $157,750 Compute ending inventory, prepare income statements, and answer questions using FIFO and LIFO. (SO 2, 3) Gross profit: FIFO $259,000 LIFO $240,500 Calculate cost of goods sold and ending inventory for FIFO, average-cost, and LIFO under the perpetual system; compare gross profit under each assumption. (SO 7) PDF Watermark Remover DEMO : Purchase from to remove the watermark
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290 Chapter 6 Inventories Instructions (a) For each of the following cost flow assumptions, calculate (i) cost of goods sold, (ii) ending inventory, and (iii) gross profit. (1) LIFO. (2) FIFO. (3) Moving-average-cost. (b) Compare results for the three cost flow assumptions. *P6-9A Sandoval Appliance Mart began operations on May 1. It uses a perpetual inventory sys- tem. During May the company had the following purchases and sales for its Model 25 Sureshot camera. Purchases Date Units Unit Cost Sales Units May 1 7 $150 4 4 8 8 $170 12 5 15 6 $185 20 3 25 4 March February (to 3/25) Net sales $300,000 $250,000 Net purchases 197,800 191,000 Freight-in 2,900 4,000 Beginning inventory 4,500 13,200 Ending inventory 13,200 ? Gross profit: LIFO $6,330 FIFO $7,500 Average $7,090 Determine ending inventory under a perpetual inventory system. (SO 7) (a) FIFO $925 Average $874 LIFO $790 Estimate inventory loss using gross profit method. (SO 8) Compute ending inventory using retail method. (SO 8) Instructions (a) Determine the ending inventory under a perpetual inventory system using (1) FIFO, (2) moving-average cost, and (3) LIFO. (b) Which costing method produces (1) the highest ending inventory valuation and (2) the lowest ending inventory valuation? *P6-10A Saffordville Company lost 70% of its inventory in a fire on March 25, 2010. The accounting records showed the following gross profit data for February and March. Saffordville Company is fully insured for fire losses but must prepare a report for the insurance company. Instructions (a) Compute the gross profit rate for the month of February. (b) Using the gross profit rate for February, determine both the estimated total inventory and in- ventory lost in the fire in March.
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