Question

In: Accounting

How are the ways to calculate FIFO, LIFO, and Average in different problems?

How are the ways to calculate FIFO, LIFO, and Average in different problems?

Solutions

Expert Solution

Calculation of Closing stock Units
Opening Stock
Add: Purchases
Less: Sold Units
Balance: Closing Stock Units
FIFO:
It assumes that, FIRST IN FIRST OUT. That Means the Closing stock will be from last purchases. Opening stock will be used first then purchases sequiencially.
Therefore here, closing stock units will be valued at the rate of recent purchases with respect to units of purchases.
LIFO:
It assumes that, LAST IN FIRST OUT. That Means the Closing stock will be from Opening Stock Units and Earlier Purchases. Recent Purchased units will be used first then from earlier purchases.
Therefore here, closing stock units will be valued at the rate of Opening Stock value and earlier purchases with respect to units of purchases.
Average:
It assumes that, units sold from all the available stock simultaneously. That Means the Closing stock can be from opening stock as well as all the purhcases made during the year.
Therefore here, closing stock units will be valued at the average rate of opening stock value and purchase price of the period.

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

How to calculate LIFO and FIFO?
How to calculate LIFO and FIFO?
how to calculate various inventory valuation methods [FIFO, LIFO, weighted average, etc.]
please explainhow to calculate various inventory valuation methods [FIFO, LIFO, weighted average, etc.]how to calculate cost of goods sold when using different inventory valuation methodshow to calculate ending inventory when using different inventory valuation methodshow to calculate ending inventory when gross profit rate is given
Explain how LIFO, FIFO, and Weighted average inventory systems will have different affects on a firm’s...
Explain how LIFO, FIFO, and Weighted average inventory systems will have different affects on a firm’s income statement and balance sheet. If a firm was concerned about reducing their tax burden, which inventory system would best benefit them? Describe a type of business that would use each of the basis of accounting for inventory; LIFO/FIFO/Weighted Average. What is the benefit to each firm?
Explain how LIFO, FIFO, and Weighted average inventory systems will have different affects on a firm's...
Explain how LIFO, FIFO, and Weighted average inventory systems will have different affects on a firm's income statement and balance sheet. If a firm was concerned about reducing their tax burden, which inventory system would best benefit them? Assume costs have been steadily rising over time. (Response does not need to be super in depth, just a brief explanation)
Explain how LIFO, FIFO, and Weighted average inventory systems will have different affects on a firm's...
Explain how LIFO, FIFO, and Weighted average inventory systems will have different affects on a firm's income statement and balance sheet. If a firm was concerned about reducing their tax burden, which inventory system would best benefit them? Assume costs have been steadily rising over time. Response should be around 150 words.
E5.7 Calculate inventory and cost of sales using FIFO, LIFO and average cost.
E5.7 Calculate inventory and cost of sales using FIFO, LIFO and average cost. Fenning Pty Ltd reports the following for the month of June: Required a. Calculate cost of the ending inventory and the cost of sales under (1) FIFO, (2) LIFO and (3) average cost b. Which costing method gives the highest ending inventory and the highest cost of sales? Why? c. How do the average cost values for ending inventory and cost of sales compare with ending inventory and cost of sales for FIFO and...
There are several methods available to calculate the value of a company’s inventory (FIFO, LIFO, Average...
There are several methods available to calculate the value of a company’s inventory (FIFO, LIFO, Average Cost, Specific Identification, Lower of Cost or Market). Pick one method and provide a company that uses that method and a valid reason why you think the company has chosen that method.
Calculate the cost of goods sold and the cost of ending inventory using the FIFO, LIFO, and average cost methods.
Inventory Costing Methods: Periodic Inventory Systems. (Appendix 6B)Tyler Company has the following information related to purchases and sales of one of its inventory items.DateDescriptionUnits Purchased at CostUnits Sold at RetailSept. 1Beginning inventory20 units @ $510Purchase30 units @ $820Sales40 units @ $1525Purchase25 units at $10Assume that the company uses the periodic inventory system.Required:Calculate the cost of goods sold and the cost of ending inventory using the FIFO, LIFO, and average cost methods. (Note: Use four decimal places for per-unit calculations and...
Using Weighted Average, FIFO and LIFO inventory cost flow methods calculate inventory. Be sure to show...
Using Weighted Average, FIFO and LIFO inventory cost flow methods calculate inventory. Be sure to show all work!!! Beginning Inventory 600 units @$6 February purchase 400 units @$7 April Purchase 700 units @$8 June purchase 300 units @$9 sold 500 units Weighted Average FIFO LIFO
Inventory Discussion Compare and contrast the three different inventory costing methods: LIFO, FIFO and weighted average...
Inventory Discussion Compare and contrast the three different inventory costing methods: LIFO, FIFO and weighted average cost. Additionally, give an example of a reason why one company might use one of these methods.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT