Week 6 session 5(3)

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School
The University of Newcastle **We aren't endorsed by this school
Course
ACFI 1002
Subject
Accounting
Date
Oct 11, 2023
Pages
3
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ACFI 1002 Week 6: Session 5 Reporting & analysing Inventory Clancy Wilson Theory Questions: 1. How many inventory costing methods are there? Which may be used under the periodic system? 2. Evaluate the effects of cost flow methods (FIFO, LIFO, WAC): a. Income statement: (price rising/price decreasing) b. Balance Sheet: (price increasing) c. Taxation effects: 3. What is the LCM or NRV rule:
4. How do inventory errors affect financial statements? a. Income statement effects Inventory Error COS Profit Understate beginning inv Overstate beginning inv Understate ending inv overstate ending inv b. Ending inventory error on Balance sheet Ending inv error Assets Liabilities Equity overstated understated 5. Specify the relationship between Sales, COS and Gross Profit. Practical Questions: 1. Hindmarsh sells baby's formula. His beginning inventory was 200 units@$24 each at the end of February. During the month of March, he made the following purchases: 1 st - Purchase for $25 each 100 Units 7 th - Purchase for $27 each 120 Units 18 th - Purchase for $28 each 80 Units 26 th - Purchase for $30 each 95 Units A periodic system is used, and the inventory at 31 March was 130 units. a) Calculate the value of ending inventory under FIFO, LIFO and WAC:
b) Assuming the Sale for March was $16800, prepare a partial income statement (up to gross profit) for the month using FIFO method.
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