8-14 John Adams Company’s record of transactions for the month of April was as f
ID: 2445524 • Letter: 8
Question
8-14
John Adams Company’s record of transactions for the month of April was as follows.
Purchases
Sales
Calculate average-cost per unit. (Round answer to 2 decimal places, e.g. 2.76.)
Average-cost per unit $?
Assuming that periodic inventory records are kept in units only, compute the inventory at April 30 using LIFO and average-cost. (Round answer to 0 decimal places, e.g. 2,760.)
Assuming that perpetual inventory records are kept in dollars, determine the inventory using (1) FIFO and (2) LIFO. (Round answer to 0 decimal places, e.g. 2,760.)
(1)
FIFO
(2)
LIFO
Compute cost of goods sold assuming periodic inventory procedures and inventory priced at FIFO. (Round answer to 0 decimal places, e.g. 2,760.)
In an inflationary period, which inventory method—FIFO, LIFO, average-cost—will show the highest net income?
_____________ inventory method will show the highest net income
$
Purchases
Sales
April 1 (balance on hand) 732 @ $ 6.00 April 3 610 @ $8.68 4 1,830 @ 6.11 9 1,708 @ 8.68 8 976 @ 6.21 11 732 @ 10.87 13 1,464 @ 6.34 23 1,464 @ 10.87 21 854 @ 6.45 27 1,098 @ 12.54 29 610 @ 6.77 5,612Calculate average-cost per unit. (Round answer to 2 decimal places, e.g. 2.76.)
Average-cost per unit $?
Assuming that periodic inventory records are kept in units only, compute the inventory at April 30 using LIFO and average-cost. (Round answer to 0 decimal places, e.g. 2,760.)
$
Average-cost$
Assuming that perpetual inventory records are kept in dollars, determine the inventory using (1) FIFO and (2) LIFO. (Round answer to 0 decimal places, e.g. 2,760.)
(1)
FIFO
(2)
LIFO
$
$
Compute cost of goods sold assuming periodic inventory procedures and inventory priced at FIFO. (Round answer to 0 decimal places, e.g. 2,760.)
Cost of Goods Sold - $
In an inflationary period, which inventory method—FIFO, LIFO, average-cost—will show the highest net income?
_____________ inventory method will show the highest net income
$
Explanation / Answer
A) Average inventory cost;
732 * 6 = 4392
1830 *6.11 = 11,181.30
976*6.21 = 6,060.96
1464 * 6.34 = 9281.76
854 * 6.45 = 5508.30
610 * 6.77 = 4,129.70
6466 units = $40,554.02
Average cost per unit = $40,554.02/ 6466 = $6.27
Assuming that periodic inventory records are kept in units only, compute the inventory at April 30 using LIFO and average-cost. (Round answer to 0 decimal places, e.g. 2,760.)
Average inventory cost = 854 * 6.27 = $5354.58
LIFO 732 * 6 = $4,392
122 * 6.11 = 745.42
total = $5,137.42
Assuming that perpetual inventory records are kept in dollars, determine the inventory using (1) FIFO and (2) LIFO.
LIFO 122 * 6 = 732
122 * 6.11 = 745.42
610 *6.77 = $4129.70
total =$5607.12
FIFO
244 * 6.45 = 1573.80
610 * 6.77 = 4129.70
total = 5703.50
Compute cost of goods sold assuming periodic inventory procedures and inventory priced at FIFO.
Total merchandise available for sale = $40,554.02
less: Inventory 5,703.50
Cost of goods sold $34,850.52
In an inflationary period, which inventory method—FIFO, LIFO, average-cost—will show the highest net income?
FIFO
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