Chapter 2- Account Unit Price $3.00 3.10 Units 30,000 10,000 30,000 50,000 20,000 25,000 Nov. 1 Beginning balance Received, Rec. Report No. 112 5 Issued, Mat. Reg. No. 49 8 Received, Rec. Report No. 113 15 Issued, Mat. Req. No. 50 22 Received, Rec. Report No. 114 28 Issued, Mat. Reg. No. 51 3.30 3.50 30,000 Required: 1. Complete a materials ledger account similar to Figure 2-10 (the "On Order" columns should be omitted) for each of the following inventory costing methods, using a perpetual inventory system: a. FIFO b. LIFO C. Weighted average (carrying unit prices to five decimal places) 2. For each method, prepare a schedule that shows the total cost of materials transferred to Work in Process and the cost of the ending inventory. 3. If prices continue to increase, would you favor adopting the FIFO or the LIFO method? Explain. 4. When prices continue to rise, what is the effect of FIFO versus LIFO on the inventory balance for materials reported in the bal- ance sheet? Discuss. -6 Inventory costing methods B 1.a. C D FIFO costing E F G H I J K L M N MATERIALS LEDGER Materials Ledger Account No. 11216 BALANCE Description: Rubber gaskets RECEIVED Rec. Rep. Date No. Quantity Unit Price 11/1 11/4 112 10,000 3.10 ISSUED Mat. Req. No. Quantity Unit Price Amount Amount 31,000.00 49 30,000 3.00 90.000.00 11/5 11/8 113 50.000 3.30 165.000.00 Quantity Unit Price Amount 30,000 3.00 90.000.00 30,000 3.00 90,000.00 10,000 3.10 31.000.00 121,000.00 10,000 3.10 31.000.00 10,000 3.10 31.000.00 50,000 3.30 165,000.00 196,000.00 40,000 3.30 132.000.00 25,000 3.50 87500.00 219,500.00 10,000 3.30 33.000.00 25 000 350 87,500.00 50 3.10 3.30 10.000 10,000 11/15 31,000.00 33,000.00 64.000.00 3.50 87,500.00 25.000 11/22 114 51 30.000 3.30 99.000.00 11/28 120,500.00 1.b. LIFO costing MATERIALS LEDGER Description: Rubber gaskets Materials Ledger Account No. 11216 RECEIVED ISSUED BALANCE Rec. Mat. Rep. Req. Amount No. Quantity Unit Price Amount Quantity Unit Price Amount Date No. Quantity Unit Price 11/1 1174 112 10,000 3.10 31,000.00 11/5 49 30,000 3.00 90,000.00 113 50,000 3.30 165,000.00 11/8 50 20.000 3.30 66,000.00 11/15 114 25,000 3.50 87,500.00 11/22 51 11/28 2 5,000 5.00 3.50 3.20 87,500.00 16 500 E2-2 E2-7 P2-1 P2-5 Ready Start a search ORL we army B C D E F G H I J K L M 1.c. Weighted average costing MATERIALS LEDGER Description: Rubber gaskets Materials Ledger Account No. 11216 BALANCE ISSUED Mat. Req. No. Quantity Unit Price Amount Amount Quantity Unit Price Amount RECEIVED Rec. Rep. Date No. Quantity Unit Price 11/1 11/4 112 10,000 3.10 11/5 11/8 113 50,000 3.30 11/15 11/22 114 3.50 11/28 31,000.00 49 3.10000 90,000.00 165,000.00 10,000 20,000 20,000 50 3.30000 31,000.00 87,500.00 517 30,000 3.30000 99,000.00