Exhibit 6.11 for required 2. Chapter & Inventories and Cost ses LIFO for invento

Question

Exhibit 6.11 for required 2.

Chapter & Inventories and Cost ses LIFO for inventory costing and reports the following financial data. It als and cost of goods sold using FIFO for comparison purposes 2015 2014 $160 $110 740 680 240 110 660 645 220 180 200 170 LIFO inventory LIFO cost of goods soid FIFO inventory ..240 Current assets (using LIFO) Current liabilities I. Campute is curent ratio, inventory turnover, and days' sales in inventory for 2015 u 1 Compute its current ratio, inventory turnover, and days' sales in inventory for 2015 u numbers and (b) FIFO numbers. (Round answers to one decimal.) 2. Comment on and intenrat th

Explanation / Answer

LIFO

Current Ratio = 220/200 = 1.1

Inventory Ratio = 740/(160+110)/2 = 5.5

Days Sales' in Inventory = 365/5.5 = 66 days

FIFO

Current Ratio = (220+80)/200 = 1.5

Inventory Turnover = 600/175 = 3.4

Days sales in inventory = 365/3.4 = 107 days

Vibrant Company Inventory:

As already reported: 2014 2015 2016 Sales 850000 850000 850000 COGS: Opening stock of goods 250000 250000 250000 Add: Purchases 500000 500000 500000 750000 750000 750000 Less: Closing stock 250000 250000 250000 Cost of goods sold 500000 500000 500000 Gross Profit 350000 350000 350000 With correct figures of closing stock: 2014 2015 2016 Sales 850000 850000 850000 COGS: Opening stock of goods 250000 230000 250000 Add: Purchases 500000 500000 500000 750000 730000 750000 Less: Closing stock 230000 250000 250000 Cost of goods sold 520000 480000 500000 Gross Profit 330000 370000 350000 Effect on COGS and Gross Profit: Cost of goods sold as                    reported 500000 500000 Error in stock valuation            as on 12.31.2014 20000 -20000 Corrected COGS 520000 480000

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