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Best Teaching Practices 11 TH Annual Accounting Educators’ Seminar Linda Bell William Jewell College.

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Presentation on theme: "Best Teaching Practices 11 TH Annual Accounting Educators’ Seminar Linda Bell William Jewell College."— Presentation transcript:

1 Best Teaching Practices 11 TH Annual Accounting Educators’ Seminar Linda Bell William Jewell College

2 Inventory Costing Demonstration Using Candy Inventory BI + P _____________________ GAS CGS _____________________ EI

3 M&M Store Purchases: 1) 8 Brown/Red ($2 each) 2) 7 Blue/Green ($3 each) 3) 5 Yellow/Orange ($4 each) 20 Total M&Ms Sold: 12 ($5 Sales Price) (Assume 4 of each group) Outside

4 Goods Available for Sale Assignment of Cost to Goods Sold and Ending Inventory Total Specific Identification Method Unit# ofCostCGSEI CostUnitsAvailable#$#$ BI$00 P1 P2 P3 GAS Totals $ 2 $ 3 $ 4 8 7 5 $16 $21 $20 20 $57 4 4 4 4 3 1 $ 8 $12 $ 9 $16$ 4 12 8$36 $21

5 M&M Store Purchases: 1) 8 Brown/Red ($2 each) 2) 7 Blue/Green ($3 each) 3) 5 Yellow/Orange ($4 each) 20 Total M&Ms Sold: 12 ($5 Sales Price) (Assume FIFO) Outside

6 FIFO Cost Flow Assumption

7 Goods Available for Sale Assignment of Cost to Goods Sold and Ending Inventory Total First-In First-Out (FIFO) Method Unit# ofCostCGSEI CostUnitsAvailable#$#$ BI$00 P1 P2 P3 GAS Totals $ 2 $ 3 $ 4 8 7 5 $16 $21 $20 20 $57 8 4 0 0 3 5 $ 16$ 0 $ 12 $ 9 $ 0$20 12 8$28 $29

8 M&M Store Purchases: 1) 8 Brown/Red ($2 each) 2) 7 Blue/Green ($3 each) 3) 5 Yellow/Orange ($4 each) 20 Total M&Ms Sold: 12 ($5 Sales Price) (Assume LIFO) Outside

9 LIFO Cost Flow Assumption

10 Goods Available for Sale Assignment of Cost to Goods Sold and Ending Inventory Total Last-In First-Out (LIFO) Method Unit# ofCostCGSEI CostUnitsAvailable#$#$ BI$00 P1 P2 P3 GAS Totals $ 2 $ 3 $ 4 8 7 5 $16 $21 $20 20 $57 0 7 5 8 0 0 $ 0$ 16 $ 21 $ 0 $ 20$ 0 12 8$41 $16

11 M&M Store Purchases: 1) 8 Brown/Red ($2 each) 2) 7 Blue/Green ($3 each) 3) 5 Yellow/Orange ($4 each) 20 Total M&Ms Sold: 12 ($5 Sales Price) (Assume Weighted Average) Outside

12 Goods Available for Sale Assignment of Cost to Goods Sold and Ending Inventory Total Weighted Average Method Unit# ofCostCGSEI CostUnitsAvailable#$#$ BI$00 P1 P2 P3 GAS Totals $ 2 $ 3 $ 4 8 7 5 $16 $21 $20 20 $57 12 8$34.20 $22.80 $57/20 = $2.8512 X $2.85 = $34.208 X $2.85 = $22.80

13 So what?

14 SpecificWeighted Income Statement IdentificationFIFOLIFOAverage Sales (12 units @ $_____) $$$$ Cost of Goods Sold Gross Profit Operating Expenses 10 Income before Taxes Income Tax Expense (assume 30%) Net Income $$$$ 5 60 3628 41 34 2432 19 26 2214 9 16 4 7 3 5 1015 6 11 Here’s What

15 There’s more… SpecificWeighted Balance Sheet IdentificationFIFOLIFOAverage Current Assets: Inventory (Ending)$$$$ Stockholders' Equity: Retained Earnings$$$$ 212916 23 10 15 611

16 SpecificWeighted Statement of Cash Flows IdentificationFIFOLIFOAverage Cash paid for income taxes$$$$ (Assume all income taxes were paid) And finally… 4 7 3 5

17 The reality is that in all cases 20 pieces of candy were purchased and 12 were sold. The different financial results are merely cosmetic. Conclusion :

18 What is a Pencast? A digital version of your notes and audio come to life as an interactive document called a pencast. Pencasts allow you to hear, see and relive notes exactly as they were captured. Use Livescribe Connect™ to easily send pencasts to people and destinations of your choice - all from your paper or Livescribe Desktop. http://www.livescribe.com/en-us/smartpen/send_and_share.html

19 Thank you for your attention! Any Questions?

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