Tinker Bell Company has the following: Units Unit Cost Inventory, Jan. 1 8,000 $

Question

Tinker Bell Company has the following: Units Unit Cost Inventory, Jan. 1 8,000 $11 Purchase, June 19 13,000 12 Purchase, Nov. 8 5,000 13 If Tinker Bell has 9,000 units on hand at December 31, the cost of the ending inventory under FIFO is

$99,000.

$117,000.

$108,000.

$113,000.

The Nansen Company uses the perpetual inventory system and the moving - average method to value inventories. In August, there were 10,000 units valued at $30,000 in the beginning inventory. On August 10, 20,000 units were purchased for $6 per unit. On August 15, 24,000 units were sold for $12 per unit. The amount charged to cost of goods sold on August 15 was

Explanation / Answer

1) Tinker Bell Company has the following: Units Unit Cost Inventory, Jan. 1 8,000 $11 Purchase, June 19 13,000 12 Purchase, Nov. 8 5,000 13 If Tinker Bell has 9,000 units on hand at December 31, the cost of the ending inventory under FIFO is

Solution: $113,000

Working: Under FIFO, ending inventory will include 5,000 units from the purchase of Nov. 8 purchase and 4,000 units from the June 19 . Thus, ending inventory is (5,000 * $13) + (4,000 * $12), or $113,000

2) The Nansen Company uses the perpetual inventory system and the moving - average method to value inventories. In August, there were 10,000 units valued at $30,000 in the beginning inventory. On August 10, 20,000 units were purchased for $6 per unit. On August 15, 24,000 units were sold for $12 per unit. The amount charged to cost of goods sold on August 15 was

Solution: 120,000

Working:

[30,000 + 20,000 * 6] / 30,000 = 5

24,000 * 5 = 120,000

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