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Explore different inventory cost methods and financial impact analysis for G Company and Brickey Inc. Learn cost of goods sold under FIFO, LIFO, and weighted average models. Examine balance sheets, income statements, and cash flow statements.
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Home Work #6 Dr. Yan Xiong
1. Invoice price of goods is $5000. Purchase terms are 2/10, n/30 and the invoice is paid in the week of receipt. The shipping terms are FOB shipping point and the shipping cost is $200. ($5,000 0.98) + $200 = $5,100 2. Invoice price of goods is $3000. Purchase terms are 4/10, n/30 and the invoice is paid in the week of receipt. The shipping terms are FOB destination and the shipping cost is $250. ($3,000 0.96) = $2,880
3. Invoice price of goods is $2500. Purchase terms are 2/10, n/30 and the invoice is paid 15 days after receipt. The shipping terms are FOB shipping point and the shipping cost is $250. $2,500 + $250 = $2,750 4. Invoice price of goods is $9000. Purchase terms are 3/10, n/30 and the invoice is paid in the week of receipt. The shipping terms are FOB destination and the shipping cost is $200. $9,000* 0.97 = $8,730
1/5 Purchased 40 units @ $100 each • 2/15 Sale 15 units @ $150 each • 4/10 Sale 10 units @ $150 each • 6/30 Purchased 30 units @ $105 each • 8/15 Sale 25 units @ 150 each • 11/28 Purchased 20 units @ $110 each Calculate Ending Inventory and Cost of Goods Sold under 1-FIFO perpetual 2-FIFO periodic 3-LIFO perpetual 4-LIFO periodic 5. Weighted-average (periodic)
FIFO perpetual CGS: (15*$100) + (10* $100) + (15 *$100) + (10* $105) = $5,050 EI: (20 $105) + (20 $110) = $4,300 GM: Sales $7,500 – CGS $5,050 = GM $2,450 FIFO periodic CGS: (40 $100) + (10 $105) = $5,050 EI: (20 $105) + (20 $110) = $4,300 GM: Sales $7,500 – CGS $5,050 = GM $2,450
LIFO perpetual CGS: (15*$100) + (10* $100) + (25 *$105) = $5,125 EI: (5 *$105) + (20 *$110)+ (15*100) = $4225 GM: Sales $7,500 – CGS $5,125= GM $2,375 LIFO periodic CGS: (20 $110) + (30 $105) = $5,350 EI: 40 $100 = $4,000 GM: Sales $7,500 – CGS $5,350 = GM $2,150
Weighted-average periodic Average cost: $9,350/90 = $103.89 (rounded) EI: 40 $103.89 = $4,156 (90 – 50 = 40) CGS: 50 $103.89 = $5,194 GM: Sales $7,500 – CGS $5,194 = GM $2,306
Given the following information for G Company for the year ending December 31, 2003. • Cash amounted to $19,375 • Beginning Inventory was $16,000 (160 units @ $100 each) • Common Stock was $15,000 • Retained Earnings was $20,375 Transaction during 2003 included: • The company purchased 150 units @ $110 each for cash • The company purchased 190 more units @120 each for cash • Cash sale were $290 units @$200 each • The company paid $11,500 cash for operating expenses • The company paid cash for income tax at a rate of 30% of net income. • Required: a. Compute the cost of good sold and ending inventory using a. FIFO, b. LIFO, and c. weighted average • b. Prepare the 2003 balance sheets, income statements and statement of cash flow using all three inventory methods.
Beginning Inventory 800 units @ $20 each • 4/5 Sale 500 units • 4/15 Purchase 400 units @ $21 each • 4/20 Purchased 400 units @ $22 each • 4/27 Sale 400 units • Required: (Periodic System) • Calculate the ending inventory using FIFO and LIFO • Suppose that 100 units were left out of the count of the ending inventory. What effect would that have on the cost of goods sold under each of the cost flow assumption in parts a and b?
Brickey, Inc.: FIFO, LIFO, and inventory errors a. (300 units @ $21) + (400 units @ $22) = $15,100 b. (700 units @ $20) = $14,000 c. If 100 units were left out using FIFO, then cost of goods sold would increase by 100 *$21 = $2,100. If 100 units were left out using LIFO, then cost of goods sold would increase by 100* $20 = $2,000.
