Inventory Costing Demonstration Inventory. M&M Store Purchases: 1) 8 Brown/Red ($2 each) 2) 7...
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Transcript of Inventory Costing Demonstration Inventory. M&M Store Purchases: 1) 8 Brown/Red ($2 each) 2) 7...
![Page 1: Inventory Costing Demonstration Inventory. M&M Store Purchases: 1) 8 Brown/Red ($2 each) 2) 7 Blue/Green ($3 each) 3) 5 Yellow/Orange ($4 each) 20 Total.](https://reader036.fdocuments.in/reader036/viewer/2022062421/56649dbc5503460f94aae66d/html5/thumbnails/1.jpg)
Inventory Costing Demonstration
Inventory
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M&M Store
Purchases:1) 8 Brown/Red ($2 each) 2) 7 Blue/Green ($3 each)3) 5 Yellow/Orange ($4 each)
20 Total M&Ms
Sold: 12 ($5 Sales Price)(Assume 4 of each
group)
Outside
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M&M Store Outside
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Goods Available for Sale Assignment of Cost to Goods Sold and Ending Inventory
Total Specific Identification Method
Unit # of Cost CGS EI
Cost Units Available # $ # $
BI
P1
P2
P3
GAS Totals
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FIFO Cost Flow Assumption
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Goods Available for Sale Assignment of Cost to Goods Sold and Ending Inventory
Total First-In, First-Out (FIFO) Method
Unit # of Cost CGS EI
Cost Units Available # $ # $
BI
P1
P2
P3
GAS Totals
![Page 7: Inventory Costing Demonstration Inventory. M&M Store Purchases: 1) 8 Brown/Red ($2 each) 2) 7 Blue/Green ($3 each) 3) 5 Yellow/Orange ($4 each) 20 Total.](https://reader036.fdocuments.in/reader036/viewer/2022062421/56649dbc5503460f94aae66d/html5/thumbnails/7.jpg)
LIFO Cost Flow Assumption
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Goods Available for Sale Assignment of Cost to Goods Sold and Ending Inventory
Total Last-In, First-Out (LIFO) Method
Unit # of Cost CGS EI
Cost Units Available # $ # $
BI
P1
P2
P3
GAS Totals
![Page 9: Inventory Costing Demonstration Inventory. M&M Store Purchases: 1) 8 Brown/Red ($2 each) 2) 7 Blue/Green ($3 each) 3) 5 Yellow/Orange ($4 each) 20 Total.](https://reader036.fdocuments.in/reader036/viewer/2022062421/56649dbc5503460f94aae66d/html5/thumbnails/9.jpg)
Goods Available for Sale Assignment of Cost to Goods Sold and Ending Inventory
Total Weighted Average Method
Unit # of Cost CGS EI
Cost Units Available # $ # $
BI $0 0 $0
P1
P2
P3
GAS Totals
$ 2
$ 3
$ 4
8
7
5
$16
$21
$20
20 $57 12 8
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So what?
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Specific Weighted
Income Statement Identification FIFO LIFO Average
Sales (12 units @ $_____) $ $ $ $
Cost of Goods Sold
Gross Profit
Operating Expenses
Income before Taxes
Income Tax Expense (assume 30%)
Net Income $ $ $ $
Her
e’s
Wh
at
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There’s more…
Specific Weighted
Balance Sheet Identification FIFO LIFO Average
Current Assets:
Inventory (Ending) $ $ $ $
Stockholders' Equity:
Retained Earnings $ $ $ $
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Specific Weighted
Statement of Cash Flows Identification FIFO LIFO Average
Cash paid for income taxes $ $ $ $
(Assume all income taxes were paid)
And
finall
y…
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The reality is that in all cases 20 pieces of candy were purchased and 12 were sold. The different financial results are merely cosmetic.
Conclusion: