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Week 6 Checkpoint – Part 1 (5 points)
Identify the inventory costing method (FIFO, LIFO, Wtd. Avg. or Spec. ID) best described by each of the following separate statements.
(Assume a period of increasing costs.)
Results in a balance sheet inventory amount approximating replacement cost.
The preferred method when each unit has unique features that affect cost.
Provides a tax advantage (deferral) to a corporation.
Requires the user to calculate an average cost per unit at the time of each sale.
Yields a balance sheet inventory amount often markedly less than replacement cost.
Week 6 Checkpoint – Part 2 (12 points)
Botta Company’s ending inventory includes the following items. Compute the lower of cost or market for ending inventory
and enter the lowest amount: a) by item, b) by category and c) as a whole.
Inventory Items
Baseball Gear:
Bats
Gloves
Category Subtotal
Baseball Apparel:
Caps
Socks
Belt
Category Subtotal
Totals
Week 6 Checkpoint – Part 3 (18 points)
Steve Rener starts a merchandising business on June 1 and enters into three inventory purchases:
June 5
June 13
June 23
Rener sells 20 units for $24 each on June 16. He uses a perpetual inventory system. Determine the costs assigned to the June
ending inventory when costs are assigned based on a) FIFO, b) LIFO, c) Weighted Average and d) Specific Identification.
Note: For item c) Weighted Average, round your answer to the nearest cent.
For item d) Specific Identification, assume 8 of the units sold are from the June 5 purchase and that 12 are from the June 13 purchase.