Question

36. Inventory records for DAD Incorporated revealed the following: Date Apr. 1 Apr.4 Transaction Beginning inventory Purchase Number of Units 50 450 Unit Cost $123.00 $130.00 DAD sold 490 units of inventory during the month. Ending inventory assuming LIFO would be s 37. Inventory records for MOM Company revealed the following: Date Mar. 1 Mar. 6 Mar. 16 Mar. 23 Transaction Beginning inventory Purchase Purchase Purchase Number of Units 400 1,000 1,000 1,000 Unit Cost $70.00 $70.20 $71.00 $71.10 MOM sold 3,300 units of inventory during the month. Ending inventory assuming FIFO would be s 38. Inventory records for STC Company revealed the following: Number of Units Date Mar. 1 Mar. 3 Mar. 23 Transaction Beginning inventory Purchase Purchase 50 Unit Cost $25.00 $25.25 $26.00 800 150 STC sold 975 units of inventory during the month. Ending inventory assuming Weighted Average would be Use the following to answer questions 39-40 MATCH... For each of the following independent situations, fill in the blanks to indicate the effect of the error on each of the various financial statement items. Assume that each of the companies uses a periodic inventory system. Indicate: (A) an understatement (B) an overstatement or (C) no effect, correct Balance Sheet Ending Retained Inventory Earnings ja. Income Statement Cost of Net Income Goods Sold Error 39. Understated El in year 1, affect on items in year 1. 40. Understated El in year 1, affect on items in year 2.

Answer 1

Answer is given below

36 Ending inventory assuming LIFO $1,230 1 | Units 10 price Total $123.00 $1,230.00 37 Ending inventory assuming FIFOL $7,110 | | Units 100 price $71.10 Total $7,110.00 38 Ending inventory assuming weighted average $633.75 Beg iny 50 Purchase 1 800 Purchase 2 150 1,000 Weighted average price $25.00 $25.25 $26.00 $1,250 $20,200 $3,900 $25,350 $25.35 | Units 25 price $25.35 Total $633.75 Ending Retained Cost of Inventory Earnings Goods sold Net Income understated understated no effect, correct understate no effect, correct overstated understated loverstated Understated El in year 1, affect on items in year 1 Understated El in year 1, affect on items in year 2