History Bookmarks People Window Help × e D Gold\'s Gym Northwest X\'( Syllabus f

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History Bookmarks People Window Help × e D Gold's Gym Northwest X'( Syllabus for MATH 147 x'( Connect tructure.com/groups/269543/discussion topics/7159431/submit BTN 6-6 ('Teamwork in Action") (relevant sections are reproduced below) .Agree with your teammates as to who will report on which inventory method (LIFO FIFO, weighted average, or specific identification) Post answers to questions a, b, c, d, and e shown below under "Concepts and Procedures to Illustrate in Expert Presentation" For full credit, be sure to show your work for your answers to parts a and b. IMPORTANT INSTRUCTIONS: 1. Navigate to your Group Homepage and use your Group's Announcement tool to decide among your teammates who will report on which inventory method. 2. Once your roles are agreed, post the solutions (for your chosen inventory method) to questions a, b, c, d, and e in your group's Discussion forum. 3. For full credit, be sure to comment on at least two of your teammates posts. Comments may be posted up to 24 hours after the assignment submission deadline. BTN 6-6 Each team member has the responsibility to become an expert on an inventory method. This expertise will be used to facilitate teammates' understanding of the concepts relevant to that method. 1. Each learning team member should select an area for expertise by choosing one of the following inventory methods: specific identification, LIFO, FIFO, or weighted average. 2. Inot relevant to our class 3. Using the following data, each student is to develop a presentation that illustrates the 30 Fs 17

Explanation / Answer

LIFO -

LIFO stands for last in first out. This is an inventoy valuation method for accounting purpose. This helps in identifying value of teh stock lying in balance sheet and value of the stock sold and forming part of cost of Goods Sold.

As the name suggest, LIFO method works on the assumption that last inventory purchased is sold first.

This method is very rarely used as all the companies will prepfer to sold the goods manufactured in the same order of manufacturing.

No one will preder to keep the old stock n godown and sale the fresh stock in market. This will result in all old and outdated stock will be lying in balance sheet and all fresh stock will be sold.

Accounting under LIFO

In case of LIFO, when the goods are sold all the cost assigned to each unit of goods sold is out of latest purchases.

If the last purchase is made on 30th Jan 100 qty @ $55 and on 25th 75 qty @ $60. If now we sale 125 units then 100qty @ $55 will be applied first against this sale and then remaining 25 qty will be applied from goods purchased on 25th @ $60.

LIFO method can be LIFO periodic or LIFO perpetual.

Answer a & b

Work Sheet with LIFO perpetual -

C. LIFO Perpetual inventory does not show an actual flow of invemtory. As discussed above this method does not take in to account that old stocks are sold first in real world. Hence this is not an acceptable method to record the cost of goods sold.

D. This method and other method do have impact in determining net income and income tax.

This method assigns cost to each unit sold. Cost of Goods sold is impacted by this. If my recent purchases are costly then old purchases then my COGS will be high in LIFO method. This will result in low net income and low taxes.

E. Ending inventory amount does not reflct the replacement cost. As in the given case, purchases have become costly after each month of purchases. My ending inventory will be cheaper as all old purchases will be reflected in the ending inventory value.

Purchases Sale Closing Balances Qty Rate Value Qty Rate Value Qty Rate Value Jan 1, Beginning Inventory 50 $100 $5,000 Jan 10, Sale 30 $100 $3,000 20 $100 $2,000 Jan 14, Purchase 150 $120 $18,000 20 $100 $2,000 150 $120 $18,000 Feb 15, Sale 100 $120 $12,000 20 $100 $2,000 50 $120 $6,000 April 30, Purchase 200 $150 $30,000 20 $100 $2,000 50 $120 $6,000 200 $150 $30,000 Sept 26, Purchase 300 $200 $60,000 20 $100 $2,000 50 $120 $6,000 200 $150 $30,000 300 $200 $60,000 Oct 5, Sale 300 $200 $60,000 20 $100 $2,000 50 $150 $7,500 50 $120 $6,000 150 $150 $22,500

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