Question
Some Accounting for Inventories questions I have: 1. CAISCO Sales Inc. had a beginning inventory of May comprising of 700 units that had a cost
Some Accounting for Inventories questions I have:
1.
CAISCO Sales Inc. had a beginning inventory of May comprising of 700 units that had a cost of $80/unit. A summary of purchases and sales during the month of May are as follows:
Date | Unit Cost | Units Purchased | Units sold |
May 2 | 400 | ||
May 6 | $83 | 1,200 | |
May 10 | 900 | ||
May 19 | $85 | 800 | |
May 23 | 500 | ||
May 30 | $88 | 300 |
If CAISCO Sales Inc. uses a periodic inventory system, which of the following statements is true?
CAISCO Sales Inc. must use the weighted average cost flow assumption since a perpetual inventory system is used.
CAISCO Sales Inc. must use the FIFO cost flow assumption since a periodic inventory system is used.
None of the other alternatives are correct
CAISCO Sales Inc.'s ending inventory will be higher if FIFO is used than if LIFO is used.
CAISCO Sales Inc.'s ending inventory consists of 1,200 units only if FIFO cost flow method IS assumed.
2.
Chime Inc. counted and valued its inventory using the first-in, first-out (FIFO) cost flow assumption at both December 31, 2004 and 2005 and reported these amounts on its financial statements. While there was no consignment inventory on hand at December 31, 2005, there was at December 31, 2004. If consignment inventory (inventory not belonging to Chime, but stored on its premises), had been inadvertently counted and included in the 2004 inventory valuation, the
inventory would have been understated at December 31, 2005
inventory would have been overstated at December 31, 2005
net income would have been understated in 2004
None of the other alternatives are correct
net income would have been understated in 2005
3.
Date | Transaction | # Units | Unit cost/sales price |
December 4 | Opening inventory | 300 | $15 |
December 10 | Purchase inventory | 100 | $18 |
December 15 | Sell inventory | 320 | $27 |
December 20 | Purchase inventory | 150 | $20 |
December 29 | Sell inventory | 100 | $30 |
Date of Transaction | Quantity Received | Unit Cost |
November 7 | 200 | $4.20 |
November 11 | 200 | $4.40 |
November 22 | 250 | $4.80 |
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