5-3A Allocating product cost between cost of goods sold and ending inventory:
Company sells coffee makers used in business offices. Its beginning inventory of coffee makers was
400 units at $50 per unit. During the
year, Suggs made two batch purchases of coffee makers. The first was a 500-unit purchase at $55 per unit;
the second was a 600-unit purchase a $58 per unit. During the period, Suggs sold 1,200 coffee
the amount of product costs that would be allocated to cost of goods sold and
ending inventory, assuming that Suggs uses
5-4A Effect of inventory cost flow (FIFO, LIFO, and weighted average) on gross
following information pertains to Baxter Company for 2013:
Beginning inventory 90 units @ $15
Units purchased 320 units @
inventory consisted of 40 units. Baxter
sold 370 units at $30 each. All
purchases and sales were made with cash.
Compute the gross margin for Baxter Company using the following cost flow
(2) LIFO, and (3) weighted average.
is the dollar amount of difference in net income between using FIFO versus
c. Determine the cash flow from operating
activities, using each of the three cost flow assumptions listed in Requirement
a. Ignore the effect of income
taxes. Explain why these cash flows have
5-5A Effect of inventory cost flow on ending inventory balance and gross margin
Sales had the following transactions for jackets in 2013, its first year of
Jan. 20 Purchased 80 units @ $15 = $ 1,200
Apr. 21 Purchased 420 units @ $16 = 6,720
Sept. 19 Purchased 150 units @ $22 = 3,300
the year, Dugan Sales sold 830 jackets for $40 each.
the amount of ending inventory Dugan would report on the balance sheet,
assuming the following cost flow assumptions: (1) FIFO, (2) LIFO, and (3)
Record the above transactions in general journal form and post to T-accounts
using (1) FIFO, (2) LIFO, and (3) weighted average. Use a separate set of journal entries and
T-accounts for each method. Assume all
transactions are cash transactions.
Compute the difference in gross margin between the FIFO and LIFO cost flow
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