Quiz 7: P7: Inventory Cost Flow Assumptions Fifolifo
In this problem, cost of goods sold and ending inventory is to be determined using various different methods. The required file worksheet is shown below::
In the open worksheet file, record the inventory sold using FIFO and LIFO in the appropriate columns. In FIFO (First In First Out) method, the first units of inventory purchased are the first units to be taken out of inventory. In LIFO (Last In First Out) method, the most recent units purchased will be the first units to be taken out of inventory. The required table is shown below:
In the calculations portion of the worksheet, formulas will be used to calculate the cost of goods sold and ending inventory cost using the specific identification, FIFO, LIFO, and average weight methods. For specific identification method, the actual cost of the units sold will be used as per the information in the data section. For the FIFO method, the unit costs from the first units purchased in inventory will be used. For the LIFO method, the unit costs from the last units purchased in inventory will be used. For the average weighted method, average of costs of all inventory purchases will be used as a per-unit cost. The required worksheet is shown below: Total goods available will have same value in for all the methods. In the answers section of the worksheet, formulas will be used to calculate costs of goods sold, gross profit, and taxes. Cost of goods sold is already calculated, cell reference will be used for those formulas. To calculate gross profit, cost of goods sold will be subtracted from sales. To calculate taxes, gross profit will be multiplied by 40%. Cell references will be used in the formulas so that they will change automatically if a cell value changes. The required worksheet is given below: Different methods of inventory accounting will result in different net incomes.