56) Buy & Large, Inc.’s inventory activity in May was:
Inventory, May 1
|
10 units @ $60 each
|
Purchase on account, May 7
|
30 units @ $70 each
|
Sale on account, May 18
|
12 units @ $120 each
|
Required:
1. What is the cost of goods sold for the May 18 sale using the weighted average (WA) cost flow method?
2. What is the cost of goods sold for the May 18 sale using FIFO cost flow method?
3. Select which method is correct by choosing WA or FIFO, or Same, if both methods give the same result.
|
Which method results in the:
|
WA
|
FIFO
|
Same
|
a.
|
higher gross profit?
|
|
|
|
b.
|
higher
Inventory
on the Balance Sheet?
|
|
|
|
c.
|
higher current assets?
|
|
|
|
d.
|
higher
Accounts payable
on the Balance Sheet?
|
|
|
|
57) Buy & Large, Inc.’s inventory activity in October was:
Inventory, October 1
|
11 units @ $8 each
|
Purchase, October 12
|
22 units @ $11 each
|
Sale, October 25
|
25 units @ $25 each
|
Show the correct effect on the accounting equation of the October 25th sale of 25 units on account using the perpetual
FIFO
method of accounting for inventory.
Assets
|
Liabilities
|
Shareholders’ equity
|
|
|
|
58) Buy & Large, Inc.’s inventory activity in October was:
Inventory, October 1
|
11 units @ $8 each
|
Purchase, October 12
|
22 units @ $11 each
|
Sale, October 25
|
25 units @ $25 each
|
Show the correct effect on the accounting equation of the October 25th sale on account using the perpetual
WEIGHTED AVERAGE COST
method of accounting for inventory.
Assets
|
Liabilities
|
Shareholders’ equity
|
|
|
|
59) Buy & Large, Inc.’s inventory activity in October was:
Inventory, October 1
|
11 units @ $8 each
|
Purchase, October 12
|
22 units @ $11 each
|
Sale, October 25
|
25 units @ $25 each
|
Show the correct effect on the accounting equation of the October 25th sale on account using the perpetual
LIFO
method of accounting for inventory.
Assets
|
Liabilities
|
Shareholders’ equity
|
|
|
|