Reference no: EM132236329
Exercise 1 - Bufford Appliance uses a perpetual inventory system. For its flat-screen television sets, the January 1 inventory was 3 sets at $650 each. On January 10, Bufford purchased 7 units at $670 each. The company sold 2 units on January 8 and 4 units on January 15.
Required -
1. Compute the ending inventory under FIFO.
2. Compute the ending inventory under LIFO.
3. Compute the ending inventory under moving-average cost.
Exercise 2 - Linda's Boards sells a snowboard, Xpert, that is popular with snowboard enthusiasts. Information relating to Linda's purchases and sales of Xpert snowboards during September is shown below. During the same month, 266 Xpert snowboards were sold. Additional data regarding Linda's sales of Xpert snowboards are provided below. Linda's uses a perpetual inventory system.
|
Date
|
Explanation
|
Units
|
Unit Cost
|
Total Cost
|
|
Sept. 1
|
Inventory
|
57
|
$97
|
$5,529
|
|
Sept. 12
|
Purchases
|
99
|
105
|
10,395
|
|
Sept. 19
|
Purchases
|
44
|
106
|
4,664
|
|
Sept. 26
|
Purchases
|
110
|
114
|
12,540
|
|
|
Totals
|
310
|
|
$33,128
|
|
Date
|
|
Units
|
Unit Price
|
Total Revenue
|
|
Sept. 5
|
Sale
|
26
|
$199
|
$5,174
|
|
Sept. 16
|
Sale
|
110
|
199
|
21,890
|
|
Sept. 29
|
Sale
|
130
|
209
|
27,170
|
|
|
Totals
|
266
|
|
$54,234
|
Required -
1. Calculate moving average cost at Sept 1, 5, 12, 16, 19, 26 & 29.
2. Compute ending inventory at September 30 using FIFO, LIFO, and moving-average cost.
3. Compare ending inventory using a perpetual inventory system to ending inventory using a periodic inventory system.
4. Which inventory cost flow method (FIFO, LIFO) gives the same ending inventory value under both periodic and perpetual?
5. Which method gives different ending inventory values?