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1. Cost Retail
2.
4. The retail method is an efficient way for companies to operate because sales em-
P4. Retail Method
August 31 physical inventory
7-28
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
1.
2.
P5. Gross Profit Method
Schedule to Estimate Inventory Destroyed
June 22, 2014
Groh Brothers
Management may want to estimate the cost of inventory for interim reports or estimate
7-29
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
1. Total
Units Price Cost
2. a.
Alternate Problems
Average-cost method:
P6. Periodic Inventory System and Inventory Costing Methods
7-30
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
b.
$8,830
Ending inventory
FIFO method:
P6. Periodic Inventory System and Inventory Costing Methods (Continued)
7-31
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
3.
))
$7,280
$8,055$147,583 $146,820
LIFO
P6. Periodic Inventory System and Inventory Costing Methods (Concluded)
19.7 days*
)
18.5
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
Unit
Units Price Amount
Unit
Units Price Amount
1. Periodic inventory system—average-cost method
*Rounded
Purchases
P7. Periodic Inventory System and Inventory Costing Methods
7-33
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
Unit
Units Price Amount
*
Unit
Price
2. Periodic inventory system—FIFO method
From purchase on March 10.
P7. Periodic Inventory System and Inventory Costing Methods (Continued)
Purchases
Amount
Units
7-34
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
Unit
Units Price Amount
*( units × )
Units
*( units ×
4.
April 4 purchases:
3. Periodic inventory system—LIFO method
The inventory costing method chosen by a company does not affect cash flows from
operations from the purchase and sale of goods because the amount actually paid for
March 1 beginning inventory
60
Purchases
P7. Periodic Inventory System and Inventory Costing Methods (Concluded)
Price
Unit Amount
$49
March 10 purchases:
March 1 beginning inventory:
7-35
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
Units Cost Amount
P8. Perpetual Inventory System and Inventory Costing Methods
1. Perpetual inventory system—average-cost method
Date
*Rounded
7-36
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
