The following information is for Pelham Company for 2013 Required:
a) Assuming that Pelham uses the LIFO cost flow method, determine how much product cost would be allocated to Cost of Goods Sold, and how much to Merchandise Inventory at the end of the year.
b) Based on your results from part a, calculate inventory turnover and average number of days to sell inventory.
c) Assuming that Pelham uses the FIFO cost flow method, determine how much product cost would be allocated to Cost of Goods sold, and how much to Merchandise Inventory at the end of the year.
d) Based on your results from part c, calculate inventory turnover and average number of days to sell inventory.
e) Compare your results from parts b and d. Do LIFO and FIFO give the same results for inventory turnover? Which is higher, and why?

Question

The following information is for Pelham Company for 2013  Required:
a) Assuming that Pelham uses the LIFO cost flow method, determine how much product cost would be allocated to Cost of Goods Sold, and how much to Merchandise Inventory at the end of the year.
b) Based on your results from part a, calculate inventory turnover and average number of days to sell inventory.
c) Assuming that Pelham uses the FIFO cost flow method, determine how much product cost would be allocated to Cost of Goods sold, and how much to Merchandise Inventory at the end of the year.
d) Based on your results from part c, calculate inventory turnover and average number of days to sell inventory.
e) Compare your results from parts b and d. Do LIFO and FIFO give the same results for inventory turnover? Which is higher, and why?

Quizplus · Accepted Answer

The Answer of The following information is for Pelham Company for 2013  Required:
a) Assuming that Pelham uses the LIFO cost flow method, determine how much product cost would be allocated to Cost of Goods Sold, and how much to Merchandise Inventory at the end of the year.
b) Based on your results from part a, calculate inventory turnover and average number of days to sell inventory.
c) Assuming that Pelham uses the FIFO cost flow method, determine how much product cost would be allocated to Cost of Goods sold, and how much to Merchandise Inventory at the end of the year.
d) Based on your results from part c, calculate inventory turnover and average number of days to sell inventory.
e) Compare your results from parts b and d. Do LIFO and FIFO give the same results for inventory turnover? Which is higher, and why?

The Following Information Is for Pelham Company for 2013