Answered: Ali Baba Tours uses a perpetual…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter7: Inventories: Cost Measurement And Flow Assumptions

Section: Chapter Questions

Problem 10RE: Jessie Stores uses the periodic system of calculating inventory. The following information is...

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Ali Baba Tours uses a perpetual inventory system. Selected transactions for the month of July are presented below. july 1 Opening inventory showed 30 units at a cost of $12 each. 5 Purchased 20 units on credit at a cost of $15 each. 8 Purchased 40 units on credit at a cost of $20 each. 12 Purchased 10 units on credit at a cost of $25 each. 15 Sold 60 units to Magic Carpets, Inc for cash at a selling price of $40 / unit. Required: - Calculate Cost of Goods Sold under the FIFO method. - Calculate the value of Ending Inventory using LIFO - As a manager of All Baba receiving a bonus of 2% of net profit, which inventory valuation method do you prefer and why?

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