Preview

Accounting (Inventory)

Good Essays
Open Document
Open Document
464 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Accounting (Inventory)
1. INVENTORY A in X

The inventory of Product A and data on purchases and sales for a two-month period in
Company X follow. Company X closes its books at the end of each month. It uses a periodic inventory system.

Apr. 1
10
17
30

Beginning inventory
Purchase
Sale
Ending inventory

50 units
100 units
90 units
60 units

@€204
@€220

May 2
14
22
30
31

Purchase
Purchase
Purchase
Sale
Ending inventory

100 units
50 units
60 units
200 units
70 units

@€216
@€224
@€234

Required:
a) Compute the cost of ending inventory of Product A on April 30 and May 31 using the average-cost method. In addition, determine cost of goods sold for
April and May. Round unit costs to cents and totals to euros.
b) Compute the cost of the ending inventory on April 30 and May 31 using the
FIFO method. In addition, determine cost of goods sold for April and May.
c) Compute the cost of the ending inventory on April 30 and May 31 using the
LIFO method. In addition, determine cost of goods sold for April and May.
d) Do X´s cash flows from operations for April and May differ depending on which inventory costing method is used? Explain.

2. INVENTORY METHODS

a) A company decided to change its inventory valuation from FIFO to weighted average in a period of rising prices. What was the result of the change in the year of the change on

1) Ending inventory ? (Increase? Decrease? No change?)

2) Net income ? (Increase? Decrease? No change?)

b) Which inventory costing method (i.e. LIFO vs FIFO vs weighted average method) approximates most closely the current replacement cost for
1) Cost of goods sold ?  ……………………..

2) Ending Inventory ?  …………………….

c) “During periods of inflation, a perpetual inventory system would result in the same dollar amount of ending inventory as a periodic inventory system”. 1) Is this true for FIFO? (Yes/No)

2) Is this true for LIFO? (Yes/No)

3. HAMLETIAN INC.
Hamletian Inc. manufactures

You May Also Find These Documents Helpful

  • Powerful Essays

    Brant Case Analysis

    • 1098 Words
    • 5 Pages

    Question 5: The year 2004 is nearly half over. J.Q. is told to determine how much the firm is likely to spend for warehousing at each of the eight warehouses for the…

    • 1098 Words
    • 5 Pages
    Powerful Essays
  • Good Essays

    The inventory method that assigns the most recent costs to cost of goods sold is…

    • 2103 Words
    • 14 Pages
    Good Essays
  • Good Essays

    Chapter 6 Accounting

    • 479 Words
    • 2 Pages

    Determine cost of goods sold for X-mart, assuming that beginning inventory was $5,000. Net purchases were $20,000 and ending inventory was $9,000.…

    • 479 Words
    • 2 Pages
    Good Essays
  • Powerful Essays

    Ac505 Course Project a

    • 3135 Words
    • 13 Pages

    Next, we have the Merchandise Purchases Budget. Total Needs are Budgeted sales in units plus Budgeted ending inventory (budgeted ending inventory =40% of the next months sales in units according to the terms of the problem). Once we have Total Needs, we subtract the Beginning Inventory (which of course is the previous months ending inventory) to get Required Unit Purchases. So for April, that is 65,000 April budgeted units + (0.40 x 100,000 May budgeted units) = 105,000…

    • 3135 Words
    • 13 Pages
    Powerful Essays
  • Satisfactory Essays

    accounting week 4 answers

    • 469 Words
    • 5 Pages

    (b) What is the unit materials cost for May? (Round unit costs to 2 decimal places, e.g. 2.25.)…

    • 469 Words
    • 5 Pages
    Satisfactory Essays
  • Good Essays

    Web Search 2

    • 739 Words
    • 3 Pages

    5. If a company has beginning inventory of $30,000 and ending inventory of $55,000, compute its average inventory. If the cost of goods sold is $140,000, compute its inventory turnover and determine how many days the average item is in stock. The average inventory would be 42,500, and average…

    • 739 Words
    • 3 Pages
    Good Essays
  • Good Essays

    RSM222 Midterm

    • 1583 Words
    • 9 Pages

    3. Using the variable costing method, which of the following costs are assigned to inventory?…

    • 1583 Words
    • 9 Pages
    Good Essays
  • Powerful Essays

    Exercise 3-13. Costing Units Completed and Ending Work in Process [LO 2,3,4] At the start of November, Penco Refinery had Work in Process inventory consisting of 4,000 units that were 90 percent complete with respect to materials and 50 percent complete with respect to conversion costs. The cost of the units was $38,000 ($25,000 of material cost and $13,000 of labor and overhead). During November, the company started 44,000 units and incurred $421,970 of material cost and $394,880 of labor and overhead. The company completed 45,000 units during the month, and 3,000 units were in process at the end of November. The units in ending Work in Process were 85 percent complete with respect to materials and 45 percent complete with respect to conversion costs.…

    • 533 Words
    • 3 Pages
    Powerful Essays
  • Satisfactory Essays

    a. Calculate purchases, gross margin, inventory turn days, accounts receivable turn days, and accounts payable turn days for the years ended 20x2, 20x3, 20x4, 20x5.…

    • 512 Words
    • 3 Pages
    Satisfactory Essays
  • Powerful Essays

    Dow Chemical Company HW

    • 1129 Words
    • 5 Pages

    2. Suppose that Dow Chemical had used first-in, first-out (FIFO) as a cost flow assumption for all of their Inventories. Would the book value of Inventories at December 31, 2012 be higher than, lower than, or the same as the amount currently recorded? If different, by how much?…

    • 1129 Words
    • 5 Pages
    Powerful Essays
  • Satisfactory Essays

    Amsterdam Company uses a periodic inventory system. For April, when the company sold 700 units, the following information is available.…

    • 1787 Words
    • 9 Pages
    Satisfactory Essays
  • Satisfactory Essays

    ACC 422 Final Exam

    • 1420 Words
    • 7 Pages

    Compute the April 30 inventory and the April cost of goods sold using the average cost method.…

    • 1420 Words
    • 7 Pages
    Satisfactory Essays
  • Powerful Essays

    Hrm 531 Week 3 Quiz

    • 4852 Words
    • 20 Pages

    If a company has ending inventory of $25,000, purchases during the year of $95,000, and beginning…

    • 4852 Words
    • 20 Pages
    Powerful Essays
  • Satisfactory Essays

    Xacc/280 Week 3 Quiz

    • 826 Words
    • 4 Pages

    6. _____ Effie Company uses a periodic inventory system. Details for the inventory account for the month of January, 2014 are as follows:…

    • 826 Words
    • 4 Pages
    Satisfactory Essays
  • Good Essays

    Fifo Lifo Avco

    • 470 Words
    • 2 Pages

    If the business trades perishable goods with the use of FIFO it can avoid obsolescence of stock. *…

    • 470 Words
    • 2 Pages
    Good Essays