Dymac Appliances uses the periodic inventory system. Details regarding the inven
ID: 2430251 • Letter: D
Question
Dymac Appliances uses the periodic inventory system. Details regarding the inventory of appliances at January 1, purchases invoices during the next 12 months, and the inventory count at December 31 are summarized as follows:
Required:
1. Determine the cost of the inventory on December 31 by the first-in, first-out method.
If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase. If units are in inventory at two different costs, enter the units PURCHASED MOST RECENTLY first.
2. Determine the cost of the inventory on December 31 by the last-in, first-out method.
If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase. If units are in inventory at two different costs, enter the OLDEST units first.
3. Determine the cost of the inventory on December 31 by the weighted average cost method.
4a. Which inventory method would be preferred for income tax purposes in periods of rising prices?
4b. Which inventory method would be preferred for income tax purposes in periods of declining prices?
Purchases InvoicesModel Inventory,
January 1
1st
2nd
3rd Inventory Count,
December 31 A10 __ 4 at $ 64 4 at $ 70 4 at $ 76 6 B15 8 at $ 176 4 at 158 3 at 170 6 at 184 8 E60 3 at 75 3 at 65 15 at 68 9 at 70 5 G83 7 at 242 6 at 250 5 at 260 10 at 259 9 J34 12 at 240 10 at 246 16 at 267 16 at 270 15 M90 2 at 108 2 at 110 3 at 128 3 at 130 5 Q70 5 at 160 4 at 170 4 at 175 7 at 180 8
Explanation / Answer
1. FIFO :- (Periodic)
Cost of Inventory on December 31
Model
Quantity
Unit Cost
Total Cost
A10
4
47
188
A10
1
44
44
B15
6
96
576
B15
1
89
89
E60
5
64
320
G83
9
231
2079
J34
13
85
1105
M90
3
131
393
M90
2
129
258
Q70
7
182
1274
Q70
1
177
177
Total
6503
2. LIFO :- (Periodic)
Cost of Inventory on December 31
Model
Quantity
Unit Cost
Total Cost
A10
4
41
164
A10
1
44
44
B15
7
92
644
E60
3
69
207
E60
2
59
118
G83
7
214
1498
G83
2
222
444
J34
12
75
900
J34
1
77
77
M90
2
109
218
M90
2
111
222
M90
1
129
129
Q70
5
162
810
Q70
3
172
516
Total
5991
3. Weighted Avg :- (Periodic)
Cost of Inventory on December 31
Model
Quantity
Unit Cost
Total Cost
A10
5
44
220
B15
7
91
637
E60
5
63
315
G83
9
225
2025
J34
13
81
1053
M90
5
122
610
Q70
8
174
1392
Total
6252
Unit cost:-
Model
Total cost (A)
Units (B)
Cost/unit
(A/B)
A10
(4 * 41) + (4 * 44) + (4 * 47)
=528
12
44
B15
(8 * 92) + (4 * 83) + (3 * 89) + (6 * 96)
=1911
21
91
E60
(3 * 69) + (3 * 59) + (15 * 62) + (9 * 64)
=1890
30
63
G83
(7 * 214) + (6 * 222) + (5 * 232) + (10 + 231)
=6300
28
225
J34
(12 * 75) + (10 * 77) + (16 * 84) + (16 * 85)
=4374
54
81
M90
(2 * 109) + (2 * 111) + (3 * 129) + (3 * 131)
=1220
10
122
Q70
(5 * 162) + ( 4 * 172) + (4 * 177) + (7 * 182)
= 3480
20
174
Cost of Inventory on December 31
Model
Quantity
Unit Cost
Total Cost
A10
4
47
188
A10
1
44
44
B15
6
96
576
B15
1
89
89
E60
5
64
320
G83
9
231
2079
J34
13
85
1105
M90
3
131
393
M90
2
129
258
Q70
7
182
1274
Q70
1
177
177
Total
6503
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