pu… Perpetoal ts rades Study Tools pts:: 1/2 ing: Completed Started At: Jun 3, 2
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pu… Perpetoal ts rades Study Tools pts:: 1/2 ing: Completed Started At: Jun 3, 2018 9:32 PMSubmitted At: Jun 3, 2018 10:20 PM Time Spent: 00:48:14 Time Limit: 01:30:00 Last Worked: Jun 3, 2018 10:20 PM Submitted By: Student Selected Item Attempt Preview Preview In WindowLarge Preview Selected Item Ch 06 Exam - 2 takes Final 0.00 a Score Ending inventory is made up of the oldest purchases when a company uses Attempt 0.00 Score average cost last-in, first-out -first-in, first-out retail method X Comments No Comments NextExplanation / Answer
Question 1;
Answer is (last-in, first out)
Explanation;
As we know that under LIFO (last-in, first out) method newly & latest purchased units are sold first that is why ending inventory is made up of the oldest purchases when a company uses last-in, first out.
Question 2;
(a). Cost of merchandise sold on August 28 = $318
(b). Inventory on August 31 = $1554
Explanation;
(a). Cost of merchandise sold on August 28 will be calculated as follow;
(13 units * $18) + (4 units * $21)
$234 + $84 = $318
(b). Inventory on August 31 will be calculated as follow;
Total units available for sale (77 units + 78 units) = 155 units
Total units sold (64 units + 17 units) = 81 units
Thus ending units will be (155 units – 81 units) = 74 units
As we know that under perpetual FIFO method oldest inventory is sold first that is why ending inventory will be consisted of;
(74 units * $21) = $1554
Question 3;
(a). Cost of merchandise sold on July 21 = $2025
(b). Inventory on July 31 = $746
Explanation;
(a). Cost of merchandise sold on July 21 will be calculated as follow;
(75 units * $27) = $2025
(b). Inventory on July 31 will be calculated as follow;
Total units available for sale (80 units + 89 units) = 169 units
Total units sold (64 units + 75 units) = 139 units
Thus ending units will be (169 units – 139 units) = 30 units
As we know that under perpetual LIFO method latest & newly purchased inventory is sold first that is why ending inventory will be consisted of;
(16 units * $23) + (14 units * $27)
$368 + $378 = $746
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