Question

In: Accounting

Alta Ski Company's inventory records contained the following information regarding its latest ski model. The company...

Alta Ski Company's inventory records contained the following information regarding its latest ski model. The company uses a periodic inventory system.

Beginning inventory, January 1, 2021 1,350 units @ $100 each
Purchases:
January 15 2,800 units @ $115 each
January 21 2,600 units @ $120 each
Sales:
January 5 1,300 units @ $140 each
January 22 1,700 units @ $150 each
January 29 1,150 units @ $155 each
Ending inventory, January 31, 2021 2,600 units


Required:

  1. 1a. Which method, FIFO or LIFO, will result in the highest cost of goods sold figure for January 2021?

  2. 1b. Which method will result in the highest ending inventory balance?

  3. 2. Compute cost of goods sold for January and the ending inventory using both the FIFO and LIFO methods.

  4. 3a. Assume that inventory costs were declining during January. The inventory purchased on January 15 had a unit cost of $90, and the inventory purchased on January 21 had a unit cost of $85. All other information is the same. Which method, FIFO or LIFO, will result in the highest cost of goods sold figure for January 2021?

  5. 3b. Which method will result in the highest ending inventory balance?

  6. 3c. Compute cost of goods sold for January and the ending inventory using both the FIFO and LIFO methods.

Solutions

Expert Solution

FIFO: Under the FIFO method, it is assumed that the goods purchased first are the goods sold first. So the ending inventory would represent the goods purchased later in point of time.
LIFO: Under the LIFO method, it is assumed that the goods purchased last are the goods sold first. So the ending inventory would represent the goods which are purchased first in point of time.


Related Solutions

Alta Ski Company's inventory records contained the following information regarding its latest ski model. The company...
Alta Ski Company's inventory records contained the following information regarding its latest ski model. The company uses a periodic inventory system. Beginning inventory, January 1, 2021 650 units @ $75 each Purchases: January 15 1,400 units @ $90 each January 21 1,200 units @ $95 each Sales: January 5 600 units @ $115 each January 22 1,000 units @ $125 each January 29 450 units @ $130 each Ending inventory, January 31, 2021 1,200 units Required: 1a. Which method, FIFO...
Alta Ski Company's inventory records contained the following information regarding its latest ski model. The company...
Alta Ski Company's inventory records contained the following information regarding its latest ski model. The company uses a periodic inventory system. Beginning inventory, January 1, 2021 1,300 units @ $95 each Purchases: January 15 2,700 units @ $110 each January 21 2,500 units @ $115 each Sales: January 5 1,250 units @ $135 each January 22 1,650 units @ $145 each January 29 1,100 units @ $150 each Ending inventory, January 31, 2021 2,500 units Required: 1a. Which method, FIFO...
Alta Ski Company's inventory records contained the following information regarding its latest ski model. The company...
Alta Ski Company's inventory records contained the following information regarding its latest ski model. The company uses a periodic inventory system. Beginning inventory, January 1, 2021 850 units @ $95 each Purchases: January 15 1,800 units @ $110 each January 21 1,600 units @ $115 each Sales: January 5 800 units @ $135 each January 22 1,200 units @ $145 each January 29 650 units @ $150 each Ending inventory, January 31, 2021 1,600 units Required: 1a. Which method, FIFO...
Alta Ski Company's inventory records contained the following information regarding its latest ski model. The company...
Alta Ski Company's inventory records contained the following information regarding its latest ski model. The company uses a periodic inventory system. Beginning inventory, January 1, 2018 1,100 units @ $75 each Purchases: January 15 2,300 units @ $90 each January 21 2,100 units @ $95 each Sales: January 5 1,050 units @ $115 each January 22 1,450 units @ $125 each January 29 900 units @ $130 each Ending inventory, January 31, 2018 2,100 units Required: 1a. Which method, FIFO...
Alta Ski Company’s inventory records contained the following information regarding its latest ski model. The company...
Alta Ski Company’s inventory records contained the following information regarding its latest ski model. The company uses a periodic inventory system. Beginning inventory, January 1, 20x1 600 units @ $80 each Purchases:   January 15 1,000 units @ $95 each   January 21 800 units @ $100 each Sales:   January 5 400 units @ $120 each   January 22 800 units @ $130 each   January 29 400 units @ $135 each Ending inventory, January 31, 20x1 800 units Compute cost of goods sold...
The following information is available regarding Western Regional Supply Company: The company's December 2019 records showed...
The following information is available regarding Western Regional Supply Company: The company's December 2019 records showed the following: Cash Receipts Journal Cash Disbursements Journal Date $ Date Cheque # $ December 1                      9                    12                    21                    23                    30               TOTAL 5,000 8,300 7,200 10,900 2,700 3,200 $ 37,300 December 2                       6                     10                     15                     17                     23                     31 47 48 49...
Crane Company uses a periodic inventory system and its accounting records include the following inventory information...
Crane Company uses a periodic inventory system and its accounting records include the following inventory information for the month of July: Units Unit Cost Total Cost July 1 Inventory on hand 150 $6.00 $900.00 12 Purchase 230 7.00 1,610.00 20 Sale (250) 0 28 Purchase 490 9.00 4,410.00 A physical inventory count determined that 620 units were on hand at July 31. (a) Calculate the ending inventory and the cost of goods sold under (1) FIFO and (2) weighted average....
Bailey Company uses a periodic inventory system and its inventory records contain the following information: Units...
Bailey Company uses a periodic inventory system and its inventory records contain the following information: Units Total Cost Beginning Inventory: 300 $780 Purchased on May 10 400 1,170 Purchased on June 15 500 1,260 Purchased on August 28     300      990 1,500 $4,200 The company sold 1,000 units during June. There were no additional purchases or sales during the remainder of the year. The company had 500 units were in its ending inventory at the end of the year....
The following information was collected from the inventory records of a company for the month of...
The following information was collected from the inventory records of a company for the month of March, 2010. During March the company sold 90 units of its product at $25 per unit. Date Units Unit Cost Total Cost Beginning inventory March 1 15 $10.00 $150 Purchase March 5 35 $12.00 $420 Purchase March 10 70 $14.00 $980 Purchase March 17 25 $15.00 $375 Determine cost of goods sold under LIFO for the month of March. answer choices: 1285, 640, 1130,...
Skiller Company has the following information regarding its inventory for the second year of operations. Transactions...
Skiller Company has the following information regarding its inventory for the second year of operations. Transactions Units Sales in units Unit Cost Beginning Inventory, January 1 35,000 $3.50 Purchases February 8 45,500 3.60 March 15 100,250 3.80 April 10 62,000 4.10 Units sold- April 22 at $12 155,000 Purchases May 9 81,000 4.35 June 19 28,000 4.56 Units sold- August 11 at $14 115,000 Purchases September 30 15,000 4.75 October 30 41,000 4.85 November 17 8,000 4.90 Units sold-December 21...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT