Part I The Sunbrite Corporation, which is owned by Jim Mathews, began May operations with merchandis
The Sunbrite Corporation, which is owned by Jim Mathews, began May operations with merchandise inventory of 12 units, each of which cost $58.
During May, Sunbrite made the following purchases:
(1) May 4, 24 units @ $59 per unit
(2) May 15, 36 units @ $61 per unit
(3) May 26, 28 units @ $64 per unit
During May the Sunbrite sold the following units at a sales price of $105 per unit:
May 6, 21 units, May 20, 27 units, May 28, 27 units.
Operating expenses in May were $2,600. The Company estimates its income taxes expense will be 35% of income before taxes.
You have been asked by Matthew Braucher to assist him in deciding which inventory costing method to use in accounting for the Sunbrite Corporation's May activity.
Prepare a schedule of cost of goods sold during May and the dollar amount of ending inventory on May 31, under the FIFO and LIFO perpetual methods.
Prepare a schedule comparing income statements for the month ending May 31, under the FIFO and LIFO perpetual methods.
What would the additional cost be to the Sunbrite Corporation if it uses LIFO perpetual?
Please read the following sections of the Accounting Standards Codification:
330-10-35-1 to 330-10-35-11
Answer the following questions:
1. Why is a departure from the cost basis of inventory required?
2. Provide a summary of the circumstances that would suggest the lower of cost or market method be applied (1) on an item basis (2) to total inventory.
Unit costs of the principal products sold by the Livingstone Company at the end of the current year are presented in the first line of the amounts below.
Beneath the actual cost figures are the anticipated selling prices and replacement costs of the products.
Costs to complete average $12 per unit and normal profit has averaged 10% of the selling prices.
Determine the following:
The amount of the ceiling and the floor for each product.
The amount to be used as designated market and the LCM.
The amount of the per unit loss, if any, on a product-by-product basis.
Product 1 Product 2 Product 3 Product 4 Product 5 Product 6
Actual Cost $140 $150 $156 $152 $160 $160
Sales prices $160 $160 $180 $180 $190 $190
Replacement cost $150 $150 $154 $146 $162 $158