FIFO, weighted-average, and LIFO methods are often used instead of specific identification for inventory valuation purposes. Compare these methods with the specific identification method, discussing the theoretical propriety of each method in the determination of income and asset valuation.
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Ford Motor Co. is considering alternate methods of accounting for the cash discounts it takes when paying suppliers promptly. One method suggested was to report these discounts as financial income when payments are made. Comment on the propriety of this approach.
Distinguish between product costs and period costs as they relat
Home Business Accounting Valuation Inventories Define “cost” as applied to the valuation of inventories. At the balance sheet date Clarkson Company held title to goods in transit amounting to $214,000. This amount was omitted from the purchases figure for the year and also from the ending inventory. What is the effect of this omission on the net income for the year as calculated when the books are closed? What is the effect on the company financial position as shown in its balance sheet? Is materialist a factor in determining whether an adjustment for this item should be made?
Where, if at all, should the following items be classified on a balance sheet?
(a) Goods out on approval to customers. (b) Goods in transit that were recently purchased f.o.b. destination. (c) Land held by a realty firm for sale. (d) Raw materials. (e) Goods received on consignment. (f) Manufacturing supplies. What is a product financing arrangement? How should product financing arrangements be reported in the financial statements?
What is the difference between a perpetual inventory and a physical inventory? If a company maintains a perpetual inventory, should its physical inventory at any date be equal to the amount indicated by the perpetual inventory records? Why?
Why inventories should be included in
(a) A statement of financial position and (b) The computation of net income? Lamonda Corp. uses a job order cost system. On April 1, the accounts had the following balances:1/31/2016
The following transactions occurred during April:
(a) Purchased materials on account at a cost of $136,000. (b) Requisitioned materials at a cost of $122,000, of which $28,000 was for general factory use. (c) Recorded factory labor of $155,000, of which $24,000 was indirect. (d) Incurred other costs: Selling expense ………….. $44,000 Factory utilities …………… 26,000 Administrative expenses …. 15,000 Factory rent ……………… 30,000 Factory depreciation …….. 24,000 (e) Applied overhead at a rate equal to 135 percent of direct labor cost. (f) Completed jobs costing $375,000. (g) Sold jobs costing $402,000. (h) Recorded sales revenue of $500,000. Required: 1. Post the April transactions to the T-accounts. ( Note: Some transactions will affect other accounts not shown; e.g., Cash, Accounts Payable, Accumulated Depreciation. You do not need to show the offsetting debit or credit to those accounts. ) 2. Compute the balance in the accounts at the end of April. 3. Compute over- or underapplied manufacturing overhead. If the balance in the Manufacturing Overhead account is closed directly to Cost of Goods Sold, will Cost of Goods Sold increase or decrease? 4. Prepare Lamonda’s cost of goods manufactured report for April. 5. Prepare Lamonda’s April income statement. Include any adjustment to Cost of Goods Sold needed to dispose of over- or underapplied manufacturingoverhead. |
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May 2021
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