Year 2016 is the first year of operations for your company. You have been givern

Question

Year 2016 is the first year of operations for your company. You have been givern the following information for the last month. All numbers (other than the cost or price per unit) are in thousands. Units Unit Cost December 1, 2016 (beginning 1,600 $18.00 invento Purchases Dec 5, 2016 Dec 15, 2016 Dec 19, 2016 Dec 25, 2016 2,600 $20.00 2,400 $21.00 1,000 $22.00 1,800 $23.00 A physical inventory on December 31 2016, shows 2,000 units on hand. The company uses the periodic inventory accounting system. The accounting year ends on December 31, 2016. Answer each of the following questions on the left side by picking one of the answers on the right side. [Hint: Finding the cost of goods available for sale first will help you with some of the answers The order of questions below was altered by Moodle without my instruction. So, you should first calculate the inventory and cost of goods sold amounts under the FIFO, LIFO and Weighted Average methods before proceeding to select the answers. That will save you some time and avoid confusion] If you were the CFO of this company whose yearly bonus was based on a percentage of the net income, which inventory cost-flow assumption would you want to use in this company? FIFO

Explanation / Answer

Units Unit cost Total cost 1-Dec-16 1600 18 28800 5-Dec 2600 20 52000 15-Dec 2400 21 50400 19-Dec 1000 22 22000 25-Dec 1800 23 41400 Total 9400 194600 FIFO COGS 148800 Units Unit cost Total cost 1-Dec-16 1600 18 28800 5-Dec 2600 20 52000 15-Dec 2400 21 50400 19-Dec 800 22 17600 Total 7400 148800 Ending Inventory 45800 19-Dec 200 22 4400 25-Dec 1800 23 41400 Total 2000 45800 LIFO COGS 157800 Units Unit cost Total cost 5-Dec 2200 20 44000 15-Dec 2400 21 50400 19-Dec 1000 22 22000 25-Dec 1800 23 41400 Total 7400 157800 Ending Inventory 36800 1-Dec-16 1600 18 28800 5-Dec 400 20 8000 Total 2000 36800 weighted avg Units Unit cost Total cost 1-Dec-16 1600 18 28800 5-Dec 2600 20 52000 15-Dec 2400 21 50400 19-Dec 1000 22 22000 25-Dec 1800 23 41400 Total 9400 194600 avg cost 20.702 COGS 7400*20.70 153196 Ending Inventory 41404 ans 1 The inventory assumption whichh give more of COGS will be choosen as this decreases net income. LIFO would be used ans 2 Reserve=45800-36800 9000 ans 3 FIFO COGS 148800 ans 4 Weighted avg cost Ending Inventory 41404 ans 5 FIFO Ending Inventory 45800 ans 6 LIFO COGS 157800 ans 7 Weighted avg cost COGS 153196 ans 8 LIFO Ending Inventory 36800

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