P6-3 and P6-4

9 100 TAKING IT FURTHER Should EastPoint Toyota use the specific identification cost determination method or one of the cost formulas? Explain. P6-3A You are given the following information for Lahti Company for the month ended November 30, 2014: Apply perpetual FIFO. Date Description Units Record sales and Unit Price inventory adjustment, Nov. 1 Beginning inventory 60 $50 calculate gross profit, and Purchase 46 answer questions. 15 Sale (120) (SO 2, 4) AP 16 Sales return (Nov. 15 sale) 5 22 Purchase 150 29 Sale (160) 30 Purchase 45 42 Lahti Company uses a perpetual inventory system. All sales and purchases are on account. Instructions (a) Calculate the cost of goods sold and the ending inventory using FIFO. (b) Assume the sales price was $66 per unit for the goods sold on November 15, and $60 per unit for the sale on November 29. Prepare journal entries to record the November 22 purchase and the November 29 sale. (c) Calculate gross profit for November. (d) Assume that at the end of November, the company counted its inventory. There are 78 units on hand. What journal entry, if any, should the company make to record the shortage? (e) If the company had not discovered this shortage, what would be overstated or understated on the balance sheet and income statement and by what amount? TAKING IT FURTHER In what respects does FIFO provide more useful information than average? P6-4A Information for Lahti Company is presented in P6-3A. Assume the same inventory data and that Apply perpetual average the company uses a perpetual inventory system. Ignore the inventory shortage in P6-3A part (d). and answer questions. (SO 2, 3) AP Instructions (a) Calculate the cost of goods sold and the ending inventory using average. (Hint: Round the average cost per unit to two decimal places.) (b) Prepare the journal entry to record the November 15 sale and the sales return on November 16. (c) If the company changes from average to FIFO and prices continue to fall, would you expect the cost of goods sold and ending inventory amounts to be higher or lower