Need Help with Accounting (1 Viewer)

[miss-smexy]

Hi guys,

I have two questions I need to do for accounting... I keep getting them wrong and am not sure why. Can someone please help me? This is my last resort because I've been reading my textbook as well but can't figure it out...

Diamond Creek Ltd is trying to determine the value of its ending inventory as of 28 February 2007, the end of the business's reporting period. The following transactions occurred, and the accountant asked your help in determining whether they should be recorded or not.

(1) On 26 February, Seller Inc. shipped goods to Diamond Creek under terms FOB delivery point. The invoice price was $350 plus $25 for freight.The receiving report indicates that the goods were received by Diamond Creek on 2 March.

Also, there is this other question I'm having trouble with:




Marinello Co. began operations on 1 July. It uses a perpetual inventory system. During July the company had the following purchases and sales.

Purchases
Date __Units__Unit Cost____Sales Units
July 1___4 _____$ 90
July 6 ___________________ 3
July 11 __5 _____$ 99
July 14 ___________________ 2
July 21 __3 _____$106
July 27 ___________________ 3

Determine the ending inventory under a perpetual inventory system using:

(1) FIFO

(2) Average cost

(3) LIFO


I calculated it already - and so did my friend... but we both got it wrong even though we got the same answers:
(1) 756
(2) 771
(3) 786

I hope someone can help me out! Would appreciate any help!

 

[Affinity]

first question: If I understood correctly FOB delivery point means that title changes when it is received and seller pays for freight, so no.

second q:

FIFO: 8 units are sold and 12 were bought.. so inventory value = cost of last 4 units = 3*106+99 = 417

Average cost:
4 units are left out 12 bought, the 12 costed 1083, so divided by 3 gives 391

LIFO: as you can see you are left with 1 unit costing 90 and 3 units costing 99 giving a grand total of 387.

you got COGS there, read the question

 

[miss-smexy]

FOB delivery point means the buyer bears the costs... so does that mean its the opposite... i.e. there IS a value for this? (Because I put in "0" before (i.e. that means no) but got it wrong)

Also,

FIFO means First in First out... so I thought that we use the cost of the units FIRST bought (so I did this but got it wrong) but it seems like you've used the cost of the units LAST bought... So I'm confused... why do they call it FIRST in first out... and why isn't it called LAST in first out then? =/

Thanks for your help btw!!

 

[Affinity]

FOB delivery point means the buyer bears the costs... I thought that would be called FOB or FOB shipping point. In any case it's when the title changes.



read the question.. it's not asking about the cost of goods sold but about how much the remaining inventory is worth... you calculated cost of goods sold. first in first out.. so last in will be remaining.

 

[bukwow]

This is what i got

1) 417
2) 404.57
3) 387

 

[Affinity]

oh you used running averages which is technically more correct

 

[miss-smexy]

Thanks guys!!

 

[seremify007]

I thought they only teach FOB for the purposes of revenue recognition... didn't realise they actually used it in first year accounting questions for inventory/COGS!

 

[bukwow]

well thats cos macq is gay cos i find the 2nd year subjects much easier than the stupid first year subjects