QS 6-5 Perpetual: Inventory costing with LIFO LO P1

A company reports the following beginning inventory and two purchases for the month of January. On January 26, the company sells 430 units. Ending inventory at January 31 totals 170 units.

	Units	Unit Cost
Beginning inventory on January 1	390	$	3.80
Purchase on January 9	90		4.00
Purchase on January 25	120		4.10

Required: Assume the perpetual inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on LIFO.

Required information

Use the following information for the Quick Study below.

Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases. Also, on December 15, Monson sells 30 units for $50 each.

Purchases on December 7	20 units @ $20.00 cost
Purchases on December 14	34 units @ $30.00 cost
Purchases on December 21	30 units @ $36.00 cost

QS 6-10 Perpetual: Assigning costs with FIFO LO P1

Required: Monson uses a perpetual inventory system. Determine the costs assigned to the December 31 ending inventory based on the FIFO method.

equired information

Use the following information for the Quick Study below.

Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases. Also, on December 15, Monson sells 30 units for $50 each.

Purchases on December 7	20 units @ $20.00 cost
Purchases on December 14	34 units @ $30.00 cost
Purchases on December 21	30 units @ $36.00 cost

QS 6-11 Perpetual: Inventory costing with LIFO LO P1

Required: Monson sells 30 units for $50 each on December 15. Monson uses a perpetual inventory system. Determine the costs assigned to the December 31 ending inventory when costs are assigned based on LIFO.

Required information

Use the following information for the Quick Study below.

Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases. Also, on December 15, Monson sells 30 units for $50 each.

Purchases on December 7	20 units @ $20.00 cost
Purchases on December 14	34 units @ $30.00 cost
Purchases on December 21	30 units @ $36.00 cost

QS 6-12 Perpetual: Inventory costing with weighted average LO P1

Required: Monson sells 30 units for $50 each on December 15. Monson uses a perpetual inventory system. Determine the costs assigned to ending inventory when costs are assigned based on the weighted average method. (Round your per unit costs to 2 decimal places.)

Required information

Use the following information for the Quick Study below.

Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases. Also, on December 15, Monson sells 30 units for $50 each.

Purchases on December 7	20 units @ $20.00 cost
Purchases on December 14	34 units @ $30.00 cost
Purchases on December 21	30 units @ $36.00 cost

QS 6-13 Perpetual: Inventory costing with specific identification LO P1

Required: Monson sells 30 units for $50 each on December 15. Of the units sold, 16 are from the December 7 purchase and 14 are from the December 14 purchase. Monson uses a perpetual inventory system. Determine the costs assigned to the December 31 ending inventory when costs are assigned based on specific identification.

Required information

Use the following information for the Exercises below.

[The following information applies to the questions displayed below.]

Laker Company reported the following January purchases and sales data for its only product.

Date			Activities	Units Acquired at Cost								Units sold at Retail
Jan.	1		Beginning inventory	235	units	@	$	16.00	=	$	3,760
Jan.	10		Sales										185	units	@	$	25.00
Jan.	20		Purchase	180	units	@	$	15.00	=		2,700
Jan.	25		Sales										200	units	@	$	25.00
Jan.	30		Purchase	370	units	@	$	14.50	=		5,365
			Totals	785	units					$	11,825		385	units

The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 400 units, where 370 are from the January 30 purchase, 5 are from the January 20 purchase, and 25 are from beginning inventory.

Exercise 6-3 Perpetual: Inventory costing methods LO P1

Required: 1. Complete the table to determine the cost assigned to ending inventory and cost of goods sold using specific identification. 2. Determine the cost assigned to ending inventory and to cost of goods sold using weighted average. 3. Determine the cost assigned to ending inventory and to cost of goods sold using FIFO. 4. Determine the cost assigned to ending inventory and to cost of goods sold using LIFO.

equired information

Use the following information for the Exercises below.

[The following information applies to the questions displayed below.]

Laker Company reported the following January purchases and sales data for its only product.

Date			Activities	Units Acquired at Cost								Units sold at Retail
Jan.	1		Beginning inventory	235	units	@	$	16.00	=	$	3,760
Jan.	10		Sales										185	units	@	$	25.00
Jan.	20		Purchase	180	units	@	$	15.00	=		2,700
Jan.	25		Sales										200	units	@	$	25.00
Jan.	30		Purchase	370	units	@	$	14.50	=		5,365
			Totals	785	units					$	11,825		385	units

The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 400 units, where 370 are from the January 30 purchase, 5 are from the January 20 purchase, and 25 are from beginning inventory.

Exercise 6-4 Perpetual: Income effects of inventory methods LO A1

Required: 1. Complete comparative income statements for the month of January for Laker Company for the four inventory methods. Assume expenses are $2,200, and that the applicable income tax rate is 40%. (Round your Intermediate calculations to 2 decimal places.)

2. Which method yields the highest net income?

LIFO

Weighted average

Specific identification

FIFO

3. Does net income using weighted average fall between that using FIFO and LIFO?

No

Yes

4. If costs were rising instead of falling, which method would yield the highest net income?

Weighted average

LIFO

Specific identification

FIFO

Required information

Use the following information for the Exercises below.

[The following information applies to the questions displayed below.] Hemming Co. reported the following current-year purchases and sales for its only product.

Date

Activities

Units Acquired at Cost

Units Sold at Retail

Jan.

1

Beginning inventory

230

units

@ $11.20

=

$

2,576

Jan.

10

Sales

160

units

@ $41.20

Mar.

14

Purchase

350

units

@ $16.20

=

5,670

Mar.

15

Sales

320

units

@ $41.20

July

30

Purchase

430

units

@ $21.20

=

9,116

Oct.

5

Sales

400

units

@ $41.20

Oct.

26

Purchase

130

units

@ $26.20

=

3,406

Totals

1,140

units

$

20,768

880

units

Exercise 6-7 Perpetual: Inventory costing methods-FIFO and LIFO LO P1

Required: Hemming uses a perpetual inventory system. 1. Determine the costs assigned to ending inventory and to cost of goods sold using FIFO. 2. Determine the costs assigned to ending inventory and to cost of goods sold using LIFO. 3. Compute the gross margin for FIFO method and LIFO method.

Reference links

Inventory Costing Illustration opens in a new window

Required information

Use the following information for the Exercises below.

[The following information applies to the questions displayed below.] Hemming Co. reported the following current-year purchases and sales for its only product.

Date

Activities

Units Acquired at Cost

Units Sold at Retail

Jan.

1

Beginning inventory

230

units

@ $11.20

=

$

2,576

Jan.

10

Sales

160

units

@ $41.20

Mar.

14

Purchase

350

units

@ $16.20

=

5,670

Mar.

15

Sales

320

units

@ $41.20

July

30

Purchase

430

units

@ $21.20

=

9,116

Oct.

5

Sales

400

units

@ $41.20

Oct.

26

Purchase

130

units

@ $26.20

=

3,406

Totals

1,140

units

$

20,768

880

units

Exercise 6-8 Specific identification LO P1

Required: Hemming uses a perpetual inventory system. Assume that ending inventory is made up of 50 units from the March 14 purchase, 80 units from the July 30 purchase, and all 130 units from the October 26 purchase. Using the specific identification method, calculate the following.