Perpetual and periodic inventory systems

Assignment Help Financial Accounting
Reference no: EM13505238

Weekly tasks or assignments (Individual or Group Projects) will be due by Monday and late submissions will be assigned a late penalty in accordance with the late penalty policy found in the syllabus. NOTE: All submission posting times are based on midnight Central Time.

Key Assignment Draft

Brian Miller is an entrepreneur. He started a small-town friendly grocery store. People stopped by his store to pick up things they did not want to run to the regular grocery store for. In 3 years, because of popular demand, he started adding more items on his shelf and pretty soon, he had grown into a regular grocery store. People loved his store because he knew everyone by their first name and would try to fulfill everyone's requests. He now needs some help with his inventory. He hired a CPA firm that would give him some advice on how he should maintain his inventory.

You are his CPA. You want to give Brian an overview on the inventory system, some different methods of recording cost of goods sold, and educate him on the accounting side of recording inventory and recording cost of goods sold.

Part 1

  1. Explain to Brian the perpetual and periodic inventory systems, covering the main differences between the two systems, and why companies use perpetual inventory system.
  2. Contrast the 4 methods of recording cost of goods sold:
    • Specific identification
    • Average cost
    • First in, First out (FIFO)
    • Last in, Last out (LIFO)
  3. ABC, a grocery company, uses a periodic inventory system. They have the following information for the month of January:

    Beginning inventory

    Jan 1: 400 units @ $10 each

    Purchases

    Jan 10: 300 units @$12 each

    Jan 15: 200 units @$15 each

    Sales

    Jan 5: 200 units @ $15 each

    Jan 12: 200 units @ $20 each

    Jan 18: 100 units @ $25 each

    Ending inventory

    Jan 31: 400 units

    • Will LIFO or FIFO generate the highest cost of goods sold? Why? Show all calculations.
    • Will the ending inventory balance will be higher under LIFO or FIFO? Why? Show all calculations.
    • What is the cost of goods sold under LIFO? Show all calculations.
    • What is the cost of goods sold under FIFO? Show all calculations.

Reference no: EM13505238

Reviews

Write a Review

 

Financial Accounting Questions & Answers

  Cash flows from financing activities for 2008

Multiple choice question based on cash flow statement - Cash flows from financing activities for 2008 total

  What are three required conditions for contingent liability

what are the three required conditions for a contingent liability to exist? What is one contingency that an auditor would be concerned with and how would the auditor become aware of this contingency?

  Determine the project''s net present value

Determine the project's net present value (NPV)? What does it imply? Find the IRR of the project? What does it mean?

  Describe the limitations of ratio analysis

Below are extracts from the financial statements of a listed company which operates a chain of bakery and sandwich retail outlets in the United Kingdom.

  Illustrate what accounts should be debited and credited

Tracy invested $50,000 cash, a law library valued at $25,000, and office furniture valued at $20,000 into her business. Illustrate what accounts should be debited and credited for this transaction?

  Develop an idea that will be the start of a business plan

develop an idea that will be the start of a business plan. build on the idea for a service business - a home

  Determine the revenue and cost for each client

Computing the revenue and cost of two clients using the data given - determine the revenue and cost for each client.

  Find out tiffany basis in the land

Tiffany remains a partner in the partnership, and the distribution is proportionate to the partners. Find out Tiffany's basis in the land, accounts receivable and TMF partnership after the distribution.

  Omit journal explanations insert one blank line between

omit journal explanations insert one blank line between journal transactions. do not alter the pages in the blank

  Budgeted income statementnbsp static and flexible

budgeted income statementnbsp static and flexible budgeted income statement variable costing variance

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Top switch inc designs and manufactures switches used in

top switch inc. designs and manufactures switches used in telecommunications. serious flooding throughout the state of

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd