Question
Inventory Costing Solution (Periodic Inventory System) Science Education Supplies, Inc. began the year with 70 Biology Lab Microscopes in stock. The following table shows the
| Inventory Costing Solution (Periodic Inventory System) | |||||
| Science Education Supplies, Inc. began the year with 70 Biology Lab Microscopes in stock. The following table shows the quantities on hand and purchased during the year. | |||||
| Acquisition Dates | Units | Unit Cost | Total Cost | ||
| Beginning Inventory, Jan. 1 | 70 | 57.81 | 4,046.70 | ||
| Purchases | |||||
| January 25 | 110 | 58.03 | 6,383.30 | ||
| March 8 | 80 | 59.00 | 4,720.00 | ||
| June 15 | 210 | 60.00 | 12,600.00 | ||
| July 27 | 70 | 63.00 | 4,410.00 | ||
| August 30 | 60 | 64.00 | 3,840.00 | ||
| Units and Cost of Goods Available for Sale | |||||
| Instructions: Determine the value of the ending inventory reported on the balance sheet and the value for cost of goods sold recognized on the income statement for the following four scenarios. Ending inventory consists of 150 microscopes for each scenario. | |||||
| Specific Identification Method: Assume the ending inventory consists of the 60 units acquired on August 30, 20 units acquired on July 27, and 70 units acquired on June 15. | |||||
| Acquisition Dates | Units | Unit Cost | Total Cost | ||
| Ending Inventory Value | |||||
| Total Cost of Goods Available | |||||
| Less: Ending Inventory | |||||
| Cost of Goods Sold Value: | |||||
| Weighted Average Cost Method | |||||
| Weighted Avg. Cost per Unit = | Weighted Avg. Cost per Unit = | ||||
| Units in Ending Inventory = | Units Sold = | ||||
| Ending Inventory Value = | Cost of Goods Sold = | ||||
| FIFO (First-In First-Out) Method | |||||
| Compute Ending Inventory | |||||
| Acquisition Dates | Units | Unit Cost | Total Cost | ||
| Ending Inventory Value = | |||||
| Compute Cost of Goods Sold | |||||
| Total Cost of Goods Available | |||||
| Less: Ending Inventory | |||||
| Cost of Goods Sold Value: | |||||
| LIFO (Last-In First-Out) Method | |||||
| Compute Ending Inventory | |||||
| Acquisition Dates | Units | Unit Cost | Total Cost | ||
| Ending Inventory Value = | |||||
| Compute Cost of Goods Sold | |||||
| Total Cost of Goods Available | |||||
| Less: Ending Inventory | |||||
| Cost of Goods Sold Value: | |||||
| 1. Which inventory valuation method will be likely to approximate replacement cost on the balance sheet? | |||||
| 2. During periods when prices continue to rise, which inventory valuation method will result in the highest net income being reported? | |||||
| 3. During periods when prices continue to reise, which inventory valuation method will result in the lowest net income being reported? | |||||
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Personal Trainer Online Purchase Managerial Accounting
Authors: Carl S. Warren, James M. Reeve, Philip E. Fess
8th Edition
0324204604, 978-0324204605
