Homework Help is Here – Start Your Trial Now!
Business
Accounting
Applying and Analyzing Inventory Costing Methods At the beginning of the current period, Chen carried 1,000 units of its product with a unit cost of $10. A summary of purchases during the current period follows. During the period, Chen sold 2,800 units. Units Unit Cost Cost $ 10 $10,000 Beginning Inventory 1,000 Purchase #1 1,800 800 1,200 Purchase #2 Purchase #3 (a) Assume that Chen uses the first-in, first-out method. Compute both cost of good sold for the current period and the ending inventory balance. Use the financial statement effects template to record cost of go Ending inventory balance $ Cost of goods sold Use negative signs with answers, when appropriate. $ Transaction Record FIFO cost of goods sold 11 19,800 13 10,400 15 18,000 Cash Asset + $ Balance Sheet Earned Noncash Contributed Assets - Liabilities + Capital + Capital Income Statement (b) Assume that Chen uses the last-in, first-out method. Compute both cost of good sold for the current period and the ending inventory balance. Ending inventory balance s Cost of goods sold Net Revenue - Expenses Income (d) Which of these three inventory costing methods would you choose to: 1. Reflect what is probably the physical flow of goods? OLIFO OFIFO OAverage Cost OLIFO OFIFO OAverage Cost 2. Minimize income taxes for the period? 3. Report the largest amount of income for the period? OLIFO OFIFO OAverage Cost (c) Assume that Chen uses the average cost method. Compute both cost of good sold for the current period and the ending inventory balance. (HINT: Do not round average cost per unit for calculations.) Ending inventory balance $ Cost of goods sold

Applying and Analyzing Inventory Costing Methods At the beginning of the current period, Chen carried 1,000 units of its product with a unit cost of $10. A summary of purchases during the current period follows. During the period, Chen sold 2,800 units. Units Unit Cost Cost $ 10 $10,000 Beginning Inventory 1,000 Purchase #1 1,800 800 1,200 Purchase #2 Purchase #3 (a) Assume that Chen uses the first-in, first-out method. Compute both cost of good sold for the current period and the ending inventory balance. Use the financial statement effects template to record cost of go Ending inventory balance $ Cost of goods sold Use negative signs with answers, when appropriate. $ Transaction Record FIFO cost of goods sold 11 19,800 13 10,400 15 18,000 Cash Asset + $ Balance Sheet Earned Noncash Contributed Assets - Liabilities + Capital + Capital Income Statement (b) Assume that Chen uses the last-in, first-out method. Compute both cost of good sold for the current period and the ending inventory balance. Ending inventory balance s Cost of goods sold Net Revenue - Expenses Income (d) Which of these three inventory costing methods would you choose to: 1. Reflect what is probably the physical flow of goods? OLIFO OFIFO OAverage Cost OLIFO OFIFO OAverage Cost 2. Minimize income taxes for the period? 3. Report the largest amount of income for the period? OLIFO OFIFO OAverage Cost (c) Assume that Chen uses the average cost method. Compute both cost of good sold for the current period and the ending inventory balance. (HINT: Do not round average cost per unit for calculations.) Ending inventory balance $ Cost of goods sold

Financial Accounting: The Impact on Decision Makers
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter5: Inventories And Cost Of Goods Sold
Section: Chapter Questions
Problem 5.10AMCP
See similar textbooks
icon
Related questions
Topic Video
Question
Applying and Analyzing Inventory Costing Methods At the beginning of the current period, Chen carried 1,000 units of its product with a unit cost of $10. A summary of purchases during the current period follows. During the period, Chen sold 2,800 units. Units Unit Cost Cost $ 10 $10,000 11 19,800 13 10,400 15 18,000 Beginning Inventory 1,000 Purchase #1 1,800 Purchase #2 Purchase #3 800 1,200 (a) Assume that Chen uses the first-in, first-out method. Compute both cost of good sold for the current period and the ending inventory balance. Use the financial statement effects template to record cost of goods sold for the period. Ending inventory balance $ Cost of goods sold Use negative signs with answers, when appropriate. $ Transaction Record FIFO cost of goods sold Cash Asset + Balance Sheet $ Noncash Contributed Earned Assets = Liabilities + Capital + Capital Income Statement Revenue - Expenses (b) Assume that Chen uses the last-in, first-out method. Compute both cost of good sold for the current period and the ending inventory balance. Ending inventory balance $ Cost of goods sold (d) Which of these three inventory costing methods would you choose to: 1. Reflect what is probably the physical flow of goods? OLIFO OFIFO OAverage Cost 2. Minimize income taxes for the period? OLIFO OFIFO OAverage Cost 3. Report the largest amount of income for the period? OLIFO OFIFO OAverage Cost Net Income (c) Assume that Chen uses the average cost method. Compute both cost of good sold for the current period and the ending inventory balance. (HINT: Do not round average cost per unit for calculations.) Ending inventory balance $ Cost of goods sold
Transcribed Image Text:Applying and Analyzing Inventory Costing Methods At the beginning of the current period, Chen carried 1,000 units of its product with a unit cost of $10. A summary of purchases during the current period follows. During the period, Chen sold 2,800 units. Units Unit Cost Cost $ 10 $10,000 11 19,800 13 10,400 15 18,000 Beginning Inventory 1,000 Purchase #1 1,800 Purchase #2 Purchase #3 800 1,200 (a) Assume that Chen uses the first-in, first-out method. Compute both cost of good sold for the current period and the ending inventory balance. Use the financial statement effects template to record cost of goods sold for the period. Ending inventory balance $ Cost of goods sold Use negative signs with answers, when appropriate. $ Transaction Record FIFO cost of goods sold Cash Asset + Balance Sheet $ Noncash Contributed Earned Assets = Liabilities + Capital + Capital Income Statement Revenue - Expenses (b) Assume that Chen uses the last-in, first-out method. Compute both cost of good sold for the current period and the ending inventory balance. Ending inventory balance $ Cost of goods sold (d) Which of these three inventory costing methods would you choose to: 1. Reflect what is probably the physical flow of goods? OLIFO OFIFO OAverage Cost 2. Minimize income taxes for the period? OLIFO OFIFO OAverage Cost 3. Report the largest amount of income for the period? OLIFO OFIFO OAverage Cost Net Income (c) Assume that Chen uses the average cost method. Compute both cost of good sold for the current period and the ending inventory balance. (HINT: Do not round average cost per unit for calculations.) Ending inventory balance $ Cost of goods sold
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 6 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Follow-up Questions
Read through expert solutions to related follow-up questions below.
Follow-up Question

Please explaim  part B) and c?  how Ending imventory balance calculated for both part of questions

Solution
Bartleby Expert
SEE SOLUTION
Knowledge Booster
Accounting for Merchandise Inventory
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Financial Accounting: The Impact on Decision Make…
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Financial Accounting
Financial Accounting
Accounting
ISBN:
9781337272124
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
College Accounting, Chapters 1-27
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
Principles of Accounting Volume 1
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Financial Accounting
Financial Accounting
Accounting
ISBN:
9781305088436
Author:
Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS