Financial Accounting: An Integrated Statements Approach, 2nd Edition

CONTROL OF INVENTORY For companies such as Best Buy, good control over inventory must be maintained. Two primary objectives of c ...

Chapter 6 Inventories 269 items, it must determine a unit cost so that it can record the proper accounting entry. To illustrate, ...

As you can see, selecting an inventory costing method can have a significant im- pact on the financial statements. For this reas ...

Chapter 6 Inventories 271 INVENTORY COSTING METHODS UNDER A PERPETUAL INVENTORY SYSTEM In a perpetual inventory system, all merc ...

To the extent that this is the case, the fifo method provides results that are about the same as those obtained by identifying t ...

Chapter 6 Inventories 273 of the units from the January 10 purchase ($21 per unit). The cost of the 7 units in in- ventory after ...

An example of using computers in maintaining perpetual inventory records for re- tail stores is described below. The relevant d ...

Chapter 6 Inventories 275 The physical count on December 31 shows that 300 units have not been sold. Using the fifo method, the ...

Deducting the cost of merchandise sold of $7,600 from the $10,400 of merchandise available for sale yields $2,800 as the cost of ...

Chapter 6 Inventories 277 COMPARING INVENTORY COSTING METHODS As we have illustrated, a different cost flow is assumed for each ...

Use of the Last-In, First-Out Method When the lifo method is used during a period of inflation or rising prices, the results are ...

Chapter 6 Inventories 279 As shown on page 278, the lifo reserve may be quite large for some companies. To illustrate, the inven ...

Inventory is valued at other than cost when (1) the cost of replacing items in in- ventory is below the recorded cost, and (2) t ...

Chapter 6 Inventories 281 digital entertainment technologies, products, and services to the motion picture, con- sumer electroni ...

INVENTORY ANALYSIS AND INTERPRETATION As with many types of financial analyses, the efficiency and effectiveness of managing inv ...

Chapter 6 Inventories 283 Number of Days’ Sales in Inventory Average Inventory Average Daily Cost of Merchandise Sold The avera ...

and (3) the gross profit (and net income) for the period. During periods of inflation, the fifo method yields the low- est amoun ...

Chapter 6 Inventories 285 Stewart Co.’s beginning inventory and purchases during the year ended December 31, 2008, were as follo ...

a.First-in, first-out method: 1,700 units at $56 $95,200 b.Last-in, first-out method: 1,000 units at $50.00 $50,000 700 units ...

Chapter 6 Inventories 287 a.Inventory Turnover  Cost of Merchandise Sold Average Inventory Inventory Turnover  $173,800 ($50 ...