connect pter 7 Homework KQuestion 9 (of 1 value: 1.00 points The records at the

Question

connect pter 7 Homework KQuestion 9 (of 1 value: 1.00 points The records at the end of January 2012 for Captain Company showed the following for a particular kind of merchandise: Inventory, December 31, 2011, at FIFO: 16 Units @ $19 = S304 Inventory, December 31. 2011, at LIFO: 16 Units@$15 $240 Unit Purchase, January 9, 2012 Purchase, January 20, 2012 Sale, January 21, 2012 (at $42 per unit Sale, January 27, 2012 (at $43 per 27 52 37 26 Cost Cost $17 $459 22 1,144 uired: the inventory turnover ratio under the FIFO and LIFO inventory costing methods. (Do not round Intermediate calculations and round your final answers to 2 decimal places.) FIFO Inventory turnover ratio LIFO Inventory turnover ratio 3.00 2. Which costing mothod is the more accurate indicator of the eficiency of inventory management? FIFO LIFO Hints References eBook & Resources

Explanation / Answer

Ans. FIFO Inventory turnover ratio 2.39 LIFO Inventory turnover ratio 3.54 Ans.1-a FIFO: Purchase Sales Balance date Units Rate Amount Units Rate Amount Units Rate Amount 1-Jan-12 16 19 304 16 19 304 9-Jan 27 17 459 16 19 304 27 17 459 20-Jan 52 22 1144 16 19 304 27 17 459 52 22 1144 21-Jan 16 19 304 21 17 357 6 17 102 52 22 1144 27-Jan 6 17 102 20 22 440 32 22 704 Total COGS 1203 End. Inv. 704 FIFO Inventory turnover ratio = Cost of goods sold / Average inventory 1203 / 504 2.39 times *Average inventory = (Opening inventory + Closing inventory) / 2 (304 + 704) / 2 504 Ans.1-b LIFO: Purchase Sales Balance date Units Rate Amount Units Rate Amount Units Rate Amount 1-Jan 16 15 240 9-Jan 27 17 459 16 15 240 27 17 459 20-Jan 52 22 1144 16 15 240 27 17 459 52 22 1144 21-Jan 37 22 814 16 15 240 27 17 459 15 22 330 27-Jan 15 22 330 11 17 187 16 15 240 16 17 272 Total COGS 1331 End. Inv. 512 LIFO Inventory turnover ratio = Cost of goods sold / Average inventory 1331 / 376 3.54 times *Average inventory = (Opening inventory + Closing inventory) / 2 (240 + 512) / 2 376 Ans.2 FIFO

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