1. When prices are falling, which inventory method generally produces a more acc
ID: 2574202 • Letter: 1
Question
1. When prices are falling, which inventory method generally produces a more accurate Ending Invento
3.In March 2012, X Corp. purchased an item of inventory for $400. By June, that item could be purchased for $360 and re-sold for $440. X’s normal profit for the item is $50. At what amount should X report the item in its June 30 balance sheet? X uses the LIFO inventory cost flow assumption.
4. X, Inc., uses the LIFO cost flow assumption. X had 100 items in its Jan. 1 beginning inventory balance, totaling $500 (that is, $5 each). X purchased another 200 items on Jan. 9 for $6 each. On Jan. 12 X sold 230 items for $10 each. By how much did this LIFO liquidation increase X's usual profit on a sale of 230 items?
FIFOExplanation / Answer
FIFO would produce the least amount of inventory value during the period in which prices are falling. FIFO is First IN First Out. The inventory assumes that the goods first in are sold out first.
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