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Chapter 6: Q34PGB_4 (page 370)

Steel It began January with 55 units of iron inventory that cost \(35 each. During January, the company completed the following inventory transactions:

Units Unit Cost Unit Sales Price

Jan. 3 Sale 45 \) 83

8 Purchase 75 $ 52

21 Sale 70 85

30 Purchase 10 55

Requirements

4. Determine the company鈥檚 cost of goods sold for January using FIFO, LIFO, andweighted-average inventory costing methods.

Short Answer

Expert verified

The COGs under FIFO, LIO, and average cost methods are - $5,045, $5,215, and $5,075, respectively.

Step by step solution

01

Cost of goods sold

The cost of goods sold is the cost of issuing stock valued under the four methods: FIFO, LIFO, Average cost, and specific identification method. These methods match the issuing stock鈥檚 price with the older, most recent, or average cost.

02

Computed Cost of goods sold under the three methods

The cost of goods sold or each method has been computed in the previous subparts. The list of COGS under the three methods is as follows 鈥�

Method

COGS

FIFO

$5,045

LIFO

$5,215

Weighted Average Method

$5,075

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Most popular questions from this chapter

Steel It began January with 55 units of iron inventory that cost \(35 each. During January, the company completed the following inventory transactions:

Units Unit Cost Unit Sales Price

Jan. 3 Sale 45 \) 83

8 Purchase 75 $ 52

21 Sale 70 85

30 Purchase 10 55

Requirements

3. Prepare a perpetual inventory record for the merchandise inventory using theweighted-average inventory costing method.

Question:Assume that a Logan Burger restaurant has the following perpetual inventory record for hamburger patties:

Date PurchasesCost ofMerchandise

Goods SoldInventory on Hand

Jul. 9 \( 450 \) 450

22 \( 270 180

31 210 390

At July 31, the accountant for the restaurant determines that the current replacementcost of the ending merchandise inventory is \)435. Make any adjusting entry needed toapply the lower-of-cost-or-market rule. Merchandise inventory would be reported onthe balance sheet at what value on July 31?

Some of M and C Electronics鈥檚 merchandise is gathering dust. It is now December 31, 2018, and the current replacement cost of the ending merchandise inventory is \(24,000 below the business鈥檚 cost of the goods, which was \)97,000. Before any adjustments at the end of the period, the company鈥檚 Cost of Goods Sold account has a balance of $380,000.

Requirements

2. At what amount should the company report merchandise inventory on the balance sheet?

Question:Refer to Short Exercises S6-4 through S6-6. After completing those exercises, answer the following questions:

Requirements

2. Which inventory costing method produced the highest cost of goods sold?

Determining inventory accounting principles

Ward Hardware used the FIFO inventory costing method in 2018. Ward plans to continue using the FIFO method in future years. Which accounting principle is most relevant to Ward鈥檚 decision?
See all solutions

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