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  • Family Appliance Mart LTD Began Operations On May 1 and

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    Bube Kachevska
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    Family Appliance Mart began operations on May 1 and uses a perpetual inventory system. In May, the company had purchases of inventory costing $5,000 on the 5th, $4,000 on the 10th, and $3,000 on the 15th. Sales for the month totaled $9,000, with $3,000, $2,000, and $4,000 in sales on the 6th, 12th, and 18th respectively. The company must determine cost of goods sold and ending inventory using FIFO and average costing methods.

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    Family Appliance Mart Ltd Began Operations on May 1 And

    Original Title

    Family Appliance Mart Ltd Began Operations on May 1 And

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    Family Appliance Mart began operations on May 1 and uses a perpetual inventory system. In May, the company had purchases of inventory costing $5,000 on the 5th, $4,000 on the 10th, and $3,000 on the 15th. Sales for the month totaled $9,000, with $3,000, $2,000, and $4,000 in sales on the 6th, 12th, and 18th respectively. The company must determine cost of goods sold and ending inventory using FIFO and average costing methods.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    6 views2 pages

    Family Appliance Mart LTD Began Operations On May 1 and

    Uploaded by

    Bube Kachevska
    Family Appliance Mart began operations on May 1 and uses a perpetual inventory system. In May, the company had purchases of inventory costing $5,000 on the 5th, $4,000 on the 10th, and $3,000 on the 15th. Sales for the month totaled $9,000, with $3,000, $2,000, and $4,000 in sales on the 6th, 12th, and 18th respectively. The company must determine cost of goods sold and ending inventory using FIFO and average costing methods.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    Family Appliance Mart Ltd began operations on May 1 and

    #8617
    Family Appliance Mart Ltd began operations on May 1 and

    Family Appliance Mart Ltd. began operations on May 1 and uses a perpetual inventory system.
    During May, the company had the following purchases and sales for one of its products

    Instructions

    (a) Determine the cost of goods sold and cost of ending inventory using (1) FIFO and (2)
    average cost. Ignore the effect of income tax. (For cost average, use unrounded numbers in
    your calculations but round to the nearest cent for presentation purposes in your answer.)

    (b) What guidelines should Family Appliance Mart consider in choosing between the FIFO and
    average cost formulas?

    (c) Which cost formula produces the higher gross profit and net income?

    (d) Which cost formula produces the higher ending inventory valuation?

    (e) Which cost formula produces the higher cash flow?

    Family Appliance Mart Ltd began operations on May 1 and

    ANSWER

    1/2
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