ASHFORD ACC305 WEEK 4 E8-13,
E8-14, E8-18, P8-5, E9-19, E9-21, and P9-1
*includes
purchase price and cost of freight.
(K)
8,000 units were on hand at the end of the month.
3. LIFO, perpetual system
4. Average cost, periodic system
5. Average cost, perpetual system
a. $10.50
b. $ 9.50
b. $10.30
b. $10.00
Net purchases 350,200 510,000
Net markups 7,000
Net markdowns 2,000
Net sales 380,000
December 31, 2011 1.10
ACC305 Intermediate
Accounting I Textbook: Spiceland, J. D., Sepe, J. F. & Nelson, M.W. (2011).
Intermediate Accounting (6th ed.). New York, N.Y.: McGraw-Hill Irwin. ISBN:
9780077500375
Week Four Exercise E8-13, E8-14, E8-18, P8-5, E9-19, E9-21, and P9-1. E
ASHFORD ACC305 WEEK 4 E8-13,
E8-14, E8-18, P8-5, E9-19, E9-21, and P9-1Week Four Exercise E8-13, E8-14, E8-18, P8-5, E9-19, E9-21, and P9-1. E
8-13
Inventory cost flow methods; periodic system ● LO1 LO4 Altira Corporation
uses a periodic inventory system. The following information related to its
merchandise inventory during the month of August 2011 is available: Aug. 1
Inventory on hand—2,000 units; cost $6.10 each. 8 Purchased 10,000 units for
$5.50 each. 14 Sold 8,000 units for $12.00 each. 18 Purchased 6,000 units for
$5.00 each. 25 Sold 7,000 units for $11.00 each.
Required:
Determine the inventory balance Altira would report in its August 31, 2011, balance sheet and the cost of goods sold it would report in its August 2011 income statement using each of the following cost flow methods: 1. First-in, first-out (FIFO) 2. Last-in, first-out (LIFO) 3. Average cost
E 8-14 Inventory cost flow methods; perpetual system ● LO1 LO4 [This is a variation of Exercise 8-13 modified to focus on the perpetual inventory system and alternative cost flow methods.]
Determine the inventory balance Altira would report in its August 31, 2011, balance sheet and the cost of goods sold it would report in its August 2011 income statement using each of the following cost flow methods: 1. First-in, first-out (FIFO) 2. Last-in, first-out (LIFO) 3. Average cost
E 8-14 Inventory cost flow methods; perpetual system ● LO1 LO4 [This is a variation of Exercise 8-13 modified to focus on the perpetual inventory system and alternative cost flow methods.]
Altira Corporation uses a
perpetual inventory system. The following transactions affected its merchandise
inventory during the month of August 2011: Aug. 1 Inventory on hand—2,000
units; cost $6.10 each. 8 Purchased 10,000 units for $5.50 each. 14 Sold 8,000
units for $12.00 each. 18 Purchased 6,000 units for $5.00 each. 25 Sold 7,000
units for $11.00 each. 31 Inventory on hand—3,000 units.
Required: Determine the inventory balance Altira would report in its August 31, 2011, balance sheet and the cost of goods sold it would report in its August 2011 income statement using each of the following cost flow methods: 1. First-in, first-out (FIFO) 2. Last-in, first-out (LIFO) 3. Average cost
Required: Determine the inventory balance Altira would report in its August 31, 2011, balance sheet and the cost of goods sold it would report in its August 2011 income statement using each of the following cost flow methods: 1. First-in, first-out (FIFO) 2. Last-in, first-out (LIFO) 3. Average cost
E 8-18
Supplemental LIFO disclosures; LIFO reserve; Steelcase Real World Financials
Steelcase Inc. is the
global leader in providing furniture for office environments. The company uses
the LIFO inventory method for external reporting and for income tax purposes
but maintains its internal records using FIFO. The following disclosure note
was included in a recent annual report:
5. Inventories ($
in millions):
|
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February
27, 2009
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February
29, 2008
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Raw materials
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$61.3
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$67.5
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Work-in-process
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15.9
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20.9
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Finished goods
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79.9
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87.9
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157.1
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176.3
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LIFO reserve
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(27.2)
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(29.6)
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$129.9
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$146.7
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The company's
income statement reported cost of goods sold of $2,236.7 million for the fiscal
year ended February 27, 2009.
Required:
1. Steelcase
adjusts the LIFO reserve at the end of its fiscal year. Prepare the February
27, 2009, adjusting entry to make the cost of goods sold adjustment.
2. If Steelcase had
used FIFO to value its inventories, what would cost of goods sold have been for
the 2009 fiscal year?
P 8-5 Various
inventory costing methods
Ferris Company
began 2011 with 6,000 units of its principal product. The cost of each unit is
$8. Merchandise transactions for the month of January 2011 are as follows:|
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Parchases
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|
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Date of
Purchase
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Units
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Unit cost*
|
Total Cost
|
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Jan. 10
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5,000
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$9
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$45,000
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Jan. 18
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6,000
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10
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60,000
|
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Totals
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11,000
|
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$105,000
|
Sales
|
Date of
Sale
|
Units
|
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Jan. 5
|
3,000
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Jan. 12
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2,000
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Jan. 20
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4,000
|
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Total
|
9,000
|
8,000 units were on hand at the end of the month.
Required:
Calculate January's
ending inventory and cost of goods sold for the month using each of the
following alternatives:
1. FIFO,
periodic system
2. LIFO,
periodic system3. LIFO, perpetual system
4. Average cost, periodic system
5. Average cost, perpetual system
P9-16 Purchase
commitments. In November 2011, the Brunswick Company signed two purchase
commitments. The first commitment
In November 2011, the Brunswick
Company signed two purchase commitments. The first commitment requires
Brunswick to purchase 10,000 units of inventory at $10 per unit by December 15,
2011. The second commitment requires the company to purchase 20,000 units of
inventory at $11 per unit by March 15, 2012. Brunswick's fiscal year-end is
December 31. The company uses a periodic inventory system. Both contracts were
exercised on their expiration date.
Required:
1. Prepare the journal entry to
record the December 15 purchase for cash assuming the following alternative
unit market prices on that date:a. $10.50
b. $ 9.50
2. Prepare any necessary
adjusting entry at December 31, 2011, for the second purchase commitment
assuming the following alternative unit market prices on that date:
a. $12.50b. $10.30
3. Assuming that the unit market
price on December 31 was $10.30, prepare the journal entry to record the
purchase on March 15, 2010, assuming the following alternative unit market
prices on that date:
a. $11.50b. $10.00
E9-21 Dollar-value
LIFO retail
Lance-Hefner Specialty Shoppes
decided to use the dollar-value LIFO retail method to value its inventory.
Accounting records provide the following information:
Cost Retail
Merchandise inventory, January $160,000 $250,000Net purchases 350,200 510,000
Net markups 7,000
Net markdowns 2,000
Net sales 380,000
Pertinent retail price indexes
are as follows:
January 1, 2011 1.00December 31, 2011 1.10
Required:
Determine ending inventory and
cost of goods sold.
P9-1
Decker Company has five products in its inventory. Information about the
December 31, 2011,
inventory follows. Unit Unit Unit Replacement Selling Product/ Quantity/
Unit Cost /unit replacement Cost/ unit selling Price_____ A /1,000 /$10/ $12 $16
B /800 /15/ 11/ 18 C/ 600 /3/ 2/ 8 D/ 200/ 7 /4/ 6 E /600 /14 /12 /13 The
selling cost for each product consists of a 15 percent sales commission. The
normal profit percentage for each product is 40 percent of the selling
price.
Required: 1. Determine the balance sheet inventory carrying value at December 31, 2011, assuming the LCM rule is applied to individual products. 2. Determine the balance sheet inventory carrying value at December 31, 2011, assuming the LCM rule is applied to the entire inventory. Also, assuming that Decker recognizes an inventory write-down as a separate income statement item, determine the amount of the loss.
Required: 1. Determine the balance sheet inventory carrying value at December 31, 2011, assuming the LCM rule is applied to individual products. 2. Determine the balance sheet inventory carrying value at December 31, 2011, assuming the LCM rule is applied to the entire inventory. Also, assuming that Decker recognizes an inventory write-down as a separate income statement item, determine the amount of the loss.
Please see the
attachment for excel solution.
TUTORIAL PREVIEW
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Inventory
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Requirement 1
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(1)
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(2)
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(3)
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(4)
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(5)
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Ceiling
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Floor
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||||
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Product
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Units
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RC
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NRV
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NRV-NP
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Designated
market value
[Middle value of
(1), (2), &(3)
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Cost
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Inventory value
[Lower of
4) $(5)
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A
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1,000
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$ 12,000
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$
13,600
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$
7,200
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$
12,000
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$
10,000
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$
10,000
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B
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800
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8,800
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12,240
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6,480
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8,800
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12,000
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8,800
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C
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600
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1,200
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4,080
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2,160
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2,160
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1,800
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1,800
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File name: P9-1-Decker.xls File type: XLS
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