ACCT 240 004 10 25 Chapter 7 Cont FIFO Oldest Costs Cost of good sold Recent Costs Ending inventory LIFO Oldest Costs Ending Inventory Recent Costs Costs of goods sold Beginning Inventory Purchases Cost of goods available for sale Ending Inventory Cost of goods sold E7 7 FIFO 11 000 units sold 3000 12 8000 10 116 000 Cost of goods sold 1000 10 8000 15 130 000 Cost of goods available for sale LIFO 11 000 units sold 8000 15 3000 10 150 000 Cost of goods sold 6000 10 3000 12 96 000 Cost of goods available for sale Weighted Average 3000 12 9000 10 8000 15 246 000 Total cost 20 000 units 12 3 unit x 11 000 units sold 135300 Cost of goods sold x 9000 units not sold 110700 Cost of goods available for sale FIFO Income Statement Sales 11 000 x 50 550 000 CGS 116 000 Gross Profit 434 000 Expenses 195 000 Pretax Income 239 000 LIFO Income Statement Sales 550 000 CGS 150 000 Gross Profit 400 000 Expenses 195 000 Pretax Income 205 000 W avg Income Statement Sales 550 000 CGS 135 300 Gross Profit 414 700 Expenses 195 000 Pretax Income 219 700 Perpetual and Periodic Inventory Systems Perpetual System Provide up to date inventory records Provides up to date cost f sales records Periodic System Inventory count at the end of an accounting period based on a physical count Lower of cost or market Inventory is valued at purchase cost per cost principle If ending inventory can be replaced with identical goods at a lower cost inventory value is updated with the market replacement cost E 7 7 70 85 5950 30 55 1650 7600
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