The beginning inventory of floor mats at International Office Supplies and data on purchases and sales for a three-month period are shown in Alternate Problem   6-1B.

 

Instructions

1.        Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 6, using the last-in, first-out method.

2.        Determine the total sales, the total cost of floor mats sold, and the gross profit from sales for the period.

3.        Determine the ending inventory cost.

 

 

Three Forks Appliances uses the periodic inventory system. Details regarding the inventory of appliances at May 1, 2005, purchases invoices during the year, and the inventory count at April 30,

 

                                                     2006, are summarized follows.

 

 

 

 

Inventory,                         Purchase Invoices                         Inventory Count,

 

Model	May 1               1st	2nd	3rd	April 30
AC54	2 at $250                    2 at $260	4 at $271	4 at $272	6
BH43	6 at        80                    5 at       82	8 at       89	8 at       90	6
G113	2 at    108                   2 at   110	3 at    128	3 at    130	5
K243	8 at        88                    4 at       79	3 at       85	6 at       92	8
PM18	7 at   242                   6 at   250	5 at    260	10 at    259	8
Q661	5 at   160                   4 at   170	4 at   175	7 at    180	8
W490	—                            4 at   150	4 at   200	4 at   202	5

Instructions

1.        Determine the cost of the inventory on April 30, 2006, by the first-in, first-out method. Present data in columnar form, using the following headings:

 

 

Model            Quantity             Unit Cost             Total Cost

 

 

If the inventory of a particular model comprises one entire purchase plus a portion of an- other purchase acquired at a different unit cost, use a separate line for each purchase.

2.        Determine the cost of the inventory on April 30, 2006, by the last-in, first-out method, fol- lowing the procedures indicated in (1).

3.        Determine the cost of the inventory on April 30, 2006, by the average cost method, using the columnar headings indicated in (1).

4.        Discuss which method (fifo or lifo) would be preferred for income tax purposes in periods of (a) rising prices and (b) declining prices.