Inventory Methods: LIFO and FIFO

When a company depletes much of its newer inventory and has to use a significant portion of its older inventory, it creates a false

increase

Inventory records for Cameron's Chemicals revealed the following: Beginning inventory: 100 gallons @ $3.00

$2,740

Net sales 3,800 Cost of goods available for sale 3,500 Operating expenses 620 Effective tax rate 40% Ending inventories: If LIFO is elected 920 If FIFO is elected 1,080

$456 $760

Z Corp. uses the periodic inventory system. During its first year of operations, Z Corp. made the following purchases (listed in chronological order of acquisition): 80 units at $10 50 units at $8 40 units at $6 Sales for the year totaled 70 units, leaving 100 units on hand at the end of the year. In comparing the ending inventory balances of first in, first out (FIFO) and last in, first out (LIFO), the ending inventory value under FIFO minus the ending inventory balance under LIFO results in a difference of __________.

$(100)

If Cameron's Chemicals sold 700 gallons this period and assuming that is uses the first in, first out (FIFO) method, the ending inventory value is __________.

$2,740

Net sales 3,800 Cost of goods available for sale 3,500 Operating expenses 620 Effective tax rate 40%Ending inventories: If LIFO is elected 920 If FIFO is elected 1,080

$360

Net sales 3,800 Cost of goods available for sale 3,500 Operating expenses 620 Effective tax rate 40 Ending inventories: % If LIFO is elected 920 If FIFO is elected 1,080

$600

Z Corp. uses the periodic inventory system. During its first year of operations, Z Corp. made the following purchases (listed in chronological order of acquisition): 80 units at $10 50 units at $8 40 units at $6 Sales for the year totaled 70 units, leaving 100 units on hand at the end of the year. Using the first in, first out (FIFO) method (rounded to the nearest whole number), what would be Z Corp's ending inventory?

$860

Z Corp. uses the periodic inventory system. During its first year of operations, Z Corp. made the following purchases (listed in chronological order of acquisition): 80 units at $10 50 units at $8 40 units at $6 Sales for the year totaled 70 units, leaving 100 units on hand at the end of the year. Using the last in, first out (LIFO) method (rounded to the nearest whole number), what would be Z Corp's ending inventory?

$960

A fuel company delivers 12,000 pounds of fuel to the Explosive Gas Station on 6/12, with a cost of $2.98/gallon. It also delivers fuel to the Explosive Gas Station on 6/21, with a cost of $2.78/gallon. Using the last-in, first-out (LIFO) method, what is the cost per gallon for the Explosive Gas Station's 6/22 fuel sales?

2.78

A fuel company delivers 12,000 pounds of fuel to the Explosive Gas Station on 6/12, with a cost of $2.98/gallon. It also delivers fuel to the Explosive Gas Station on 6/21, with a cost of $2.78/gallon. Using the first-in, first-out (FIFO) method, what is the cost per gallon for the Explosive Gas Station's 6/22 fuel sales?

2.98

A carpenter receives in a wood shipment on 4/22 with a cost of $4.55 per piece. He also received in another shipment of wood, on 5/12, with a cost of $4.62 per piece. Using the first-in, first-out (FIFO) method, what is the cost per piece for items (raw materials) that are taken out of inventory on 5/16 to be used in creating a finished good?

4.55

A carpenter receives in a wood shipment on 4/22 with a cost of $4.55 per piece. He also received in another shipment of wood, on 5/12, with a cost of $4.62 per piece. Using the last-in, first-out (LIFO) method, what is the cost per piece for items (raw materials) that are taken out of inventory on 5/16 to be used in creating a finished good?

4.62

The choice of whether to use the last-in, first-out (LIFO) or first-in, first-out (FIFO) methods for costing inventory will affect which of the following?

Tax liability Balance sheet

When using the last-in, first-out (LIFO) method, which of the following will occur?

The company will use the price of the most recent items purchased to value its inventory

When using the first-in, first-out (FIFO) method, which of the following will occur?

The cost of goods sold (COGS) amount will be lower than the last-in, first-out (LIFO) method Profit will be higher than that with the LIFO method The value of the ending inventory will be higher than that with the LIFO method

A widget company delivers 2,000 widgets to XYZ Corporation at a cost of $45/widget on Thursday. On the following Tuesday, the company delivers 3,000 more widgets to XYZ Corporation at a cost of $47/widget. XYZ Corporation makes a sale of 1,500 widgets the next day. Using the first-in, first-out (FIFO) method, what would be the individual cost of the 1,500 widgets sold?

45

A widget company delivers 2,000 widgets to XYZ Corporation at a cost of $45/widget on Thursday. On the following Tuesday, the company delivers 3,000 more widgets to XYZ Corporation, at a cost of $47/widget. XYZ Corporation makes a sale of 1,500 widgets the next day. Using the last-in, first-out (LIFO) method, what would be the individual cost of the 1,500 widgets sold?

47

In a period when costs are falling and inventory quantities are stable, which of the following inventory methods would the lowest taxable income be reported by?

First in, first out (FIFO)