Beginning inventory 600 800 4800 january 5 2003 1200

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Beginning inventory600$ 8.00$ 4,800January 5, 20031,2009.0010,800January 25, 20031,30010.0013,000February 16, 200380011.008,800March 26, 200360012.007,2004,500$44,600Weighted average cost($44,600 ÷4,500)$ 9.91*March 31, 2003, inventory1,600$ 9.91$15,856*Rounded off.
8-25EXERCISE 8-11 (15-20 minutes)(a)1.2,100 units available for sale – 1,400 units sold = 700 units inthe ending inventory.500 @ $4.58 =$2,290200@ 4.60 =920700$3,210Ending inventory at FIFO cost.2.100 @ $4.10 =$ 410600@ 4.20 =2,520700$2,930Ending inventory at LIFO cost.3.$9,240 cost of goods available for sale ÷2,100 units availablefor sale = $4.40 weighted-average unit cost.700 units X $4.40 = $3,080Ending inventory at weighted-average cost.(b)1.LIFO will yield the lowest gross profit figure because thismethod will yield the highest cost of goods sold figure in thesituation presented. The company has experienced risingpurchase prices for its inventory acquisitions. In a period ofrising prices, LIFO will yield the highest cost of goods soldfigure because the most recent purchase prices (which are thehigher prices in this case) are used to price cost of goods soldwhile the older (and lower) purchase prices are used to costthe ending inventory.2.LIFO will yield the lowest ending inventory figure because LIFOuses the oldest costs to price the ending inventory units. Thecompany has experienced rising purchase prices. The oldestcosts in this case are the lower costs.
8-26EXERCISE 8-12 (10-15 minutes)(a)(1)400 @ $30 =$12,000160 @ $25 =4,000$16,000(2)400 @ $20 =$ 8,000160 @ $25 =4,000$12,000(b)(1)FIFO$16,000 [same as (a)](2)LIFO400 @ $30 =$12,00060 @ $25 =1,500100 @ $20 =2,000$15,500
8-27EXERCISE 8-13 (15-20 minutes)First-in, first-outLast-in, first-outSales$1,050,000$1,050,000Cost of goods sold:Inventory, Jan. 1$120,000$120,000Purchases592,000*592,000Cost of goods available712,000712,000Inventory, Dec. 31235,000**164,000***Cost of goods sold477,000548,000Gross profit573,000502,000Operating expenses200,000200,000Net income$ 373,000$ 302,000*Purchases6,000 @ $22 =$132,00010,000 @ $25 =250,0007,000 @ $30 =210,000$592,000**Computation of inventory, Dec. 31:First-in, first-out:7,000 units @ $30 =$210,0001,000 units @ $25 =25,000$235,000***Last-in, first-out:6,000 units @ $20 =$120,0002,000 units @ $22 =44,000$164,000
8-28EXERCISE 8-14 (20-25 minutes)Sandy Alomar CorporationSCHEDULES OF COST OF GOODS SOLDFor the First Quarter Ended March 31, 2004Schedule 1First-in, First-outSchedule 2Last-in, First-outBeginning inventory$ 40,000$ 40,000Plus purchases146,200*146,200Cost of goods available for sale186,200186,200Less ending inventory61,30056,800Cost of goods sold$124,900$129,400*($33,600 + $25,500 + $38,700 + $48,400)Schedules Computing Ending InventoryUnitsBeginning inventory10,000Plus purchases34,000Units available for sale44,000Less sales ($150,000 ÷5)30,000Ending inventory14,000The unit computation is the same for both assumptions, but the costassigned to the units of ending inventory are different.First-in, First-out (Schedule 1)Last-in, First-out (Schedule 2)11,000at $4.40 =$48,40010,000at $4.00 =$40,0003,000at $4.30 =12,9004,000at $4.20 =16,80014,000$61,30014,000$56,800
8-29EXERCISE 8-15 (10-15 minutes)(a)FIFO Ending Inventory 12/31/0476 @ $10.89* =$ 827.6424 @ $11.88** =285.12$1,112.76*[$11.00 – .01 ($11.00)]**[$12.00 – .01 ($12.00)](b)LIFO Cost of Goods Sold—200476 @ $10.89 =$ 827.6484 @ $11.88 =997.9290 @ $14.85* =1,336.5015 @ $15.84**=237.60$3,399.66*[$15.00 – .01 ($15)]**[$16.00 – .01 ($16)](c)FIFO matches older costs with revenue. When prices are declining,as in this case, this results in a higher amount for cost of goodssold. Therefore, it is recommended that FIFO be used by HowieLong Shop to minimize taxable income.
8-30EXERCISE 8-16 (10-15 minutes)(a)The difference between the inventory used for internal reportingpurposes and LIFO is referred to as the allowance to Reduce

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