Saturday, February 20, 2016

Dollar-Value LIFO Richardson Company cans a variety of vegetable-type soups.

Dollar-Value LIFO Richardson Company cans a variety of vegetable-type soups. Recently, the company decided to value its inventories using dollar-value LIFO pools. The clerk who accounts for inventories does not understand how to value the inventory pools using this new method, so, as a private consultant, you have been asked to teach him how this new method works. He has provided you with the following information about purchases made over a 6-year period. You have already explained to him how this inventory method is maintained, but he would feel better about it if you were to leave him detailed instructions explaining how these calculations are done and why he needs to put all inventories at a base-year value.
(a) Compute the ending inventory for Richardson Company for 2006 through 2011 using dollar-value LIFO.
(b) Using your computation schedules as your illustration, write a step-by-step set of instructions explaining how the calculations are done. Begin your explanation by briefly explaining the theory behind this inventory method, including the purpose of putting all amounts into base-year pricelevels.

 http://asdhomework.byethost18.com
asdhomework


Dollar-Value LIFO Richardson Company cans a variety of vegetable

Internal Indexes ”Dollar-Value LIFO Presented below is information related to Kaisson

Internal Indexes Dollar-Value LIFO Presented below is information related to Kaisson Corporation for the last 3 years. Compute the ending inventories under the dollar-value LIFO method for 2009, 2010, and 2011. The base period is January 1, 2009, and the beginning inventory cost at that date was $45,000. Compute indexes to two decimal places.

http://asdhomework.byethost18.com
asdhomework



Internal Indexes—Dollar-Value LIFO Presented below is informatio

Internal Indexes Dollar-Value LIFO On January 1, 2010, Bonanza Wholesalers Inc.

Internal Indexes”Dollar-Value LIFO On January 1, 2010, Bonanza Wholesalers Inc. adopted the dollar-value LIFO inventory method for income tax and external financial reporting purposes. However, Bonanza continued to use the FIFO inventory method for internal accounting and management purposes. In applying the LIFO method, Bonanza uses internal conversion price indexes and the multiple pools approach under which substantially identical inventory items are grouped into LIFO inventory pools. The following data were available for inventory pool no. 1, which comprises products A and B, for the 2 years following the adoption of LIFO.
(a) Prepare a schedule to compute the internal conversion price indexes for 2010 and 2011. Round indexes to two decimal places
(b) Prepare a schedule to compute the inventory amounts at December 31, 2010 and 2011, using the dollar-value LIFO inventory method.


http://asdhomework.byethost18.com
asdhomework

 


Internal Indexes—Dollar-Value LIFO On January 1, 2010, Bonanza W




ollar-Value LIFO Norman Televisions produces television sets in three categories:

Dollar-Value LIFO Normans Televisions produces television sets in three categories: portable, midsize, and flat-screen. On January 1, 2010, Norman adopted dollar-value LIFO and decided to use a single inventory pool. The companyâs January 1 inventory consists of. During 2010, the company had the following purchases and sales. Round to four decimals
(a) Compute ending inventory, cost of goods sold, and gross profit.
(b) Assume the company uses three inventory pools instead of one. Repeat instruction(a).


Dollar-Value LIFO Norman’s Televisions produces television sets

Financial Statement Effects of FIFO and LIFO the management of Tritt Company

Financial Statement Effects of FIFO and LIFO the management of Tritt Company has asked its accounting department to describe the effect upon the company’s financial position and its income statements of accounting for inventories on the LIFO rather than the FIFO basis during 2010 and 2011. The accounting department is to assume that the change to LIFO would have been effective on January 1, 2010, and that the initial LIFO base would have been the inventory value on December 31, 2009. Presented below are the company’s financial statements and other data for the years 2010 and 2011 when the FIFO method was employed. Other data:

1. Inventory on hand at December 31, 2009, consisted of 40,000 units valued at $3.00 each.

2. Sales (all units sold at the same price in a given year):

2010—150,000 units @ $6.00 each 2011—180,000 units @ $7.50 each

3. Purchases (all units purchased at the same price in given year):

2010—150,000 units @ $3.50 each 2011—180,000 units @ $4.40 each

4. Income taxes at the effective rate of 40% are paid on December 31 each year. Name the account(s) presented in the financial statements that would have different amounts for 2011 if LIFO rather than FIFO had been used, and state the new amount for each account that is named. Show computations.

(CMAadapted)


Financial Statement Effects of FIFO and LIFO the management of



Compute FIFO, LIFO, Average Cost Periodic and Perpetual Ehlo Company is a multiproduct

Compute FIFO, LIFO, Average Cost Periodic and Perpetual Ehlo Company is a multiproduct firm. Presented below is information concerning one of its products, the Hawkeye. Compute cost of goods sold, assuming Ehlo uses:
(a) Periodic system, FIFO cost flow. 

http://asdhomework.byethost18.com

asdhomework

(b) Perpetual system, FIFO cost flow.
(c) Periodic system, LIFO cost flow.
(d) Perpetual system, LIFO cost flow.
(e) Periodic system, weighted-average cost flow.
(f) Perpetual system, moving-average costflow.

Compute FIFO, LIFO, Average Cost—Periodic and Perpetual Ehlo Com

Compute FIFO, LIFO, and Average Cost some of the information found on a detail inventory

Compute FIFO, LIFO, and Average Cost some of the information found on a detail inventory card for Slatkin Inc. for the first month of operations is as follows.
(a) From these data compute the ending inventory on each of the following bases. Assume that perpetual inventory records are kept in units only. Carry unit costs to the nearest cent and ending inventory to the nearest dollar.
(1) First-in, first-out (FIFO).
(2) Last-in, first-out (LIFO).
(3) Average cost.
(b) If the perpetual inventory record is kept in dollars, and costs are computed at the time of each withdrawal, would the amounts shown as ending inventory in 1, 2, and 3 above be the same? Explain andcompute.


Compute FIFO, LIFO, and Average Cost some of the information

Compute FIFO, LIFO, and Average Cost Hull Company record of transactions concerning part

Compute FIFO, LIFO, and Average Cost Hull Company record of transactions concerning part X for the month of April was as follows.
(a) Compute the inventory at April 30 on each of the following bases. Assume that perpetual inventory records are kept in units only. Carry unit costs to the nearest cent.
(1) First-in, first-out (FIFO).
(2) Last-in, first-out (LIFO).
(3) Average cost.
(b) If the perpetual inventory record is kept in dollars, and costs are computed at the time of each withdrawal, what amount would be shown as ending inventory in 1, 2, and 3 above? Carry average unit costs to four decimalplaces.


Compute FIFO, LIFO, and Average Cost Hull Company’s record of

Purchases Recorded Gross and Net some of the transactions of Torres Company during August

Purchases Recorded Gross and Net some of the transactions of Torres Company during August are listed below. Torres uses the periodic inventory method.
August 10 Purchased merchandise on account, $12,000, terms 2/10, n/30.
13 Returned part of the purchase of August 10, $1,200, and received credit on account.
15 Purchased merchandise on account, $16,000, terms 1/10, n/60.
25 Purchased merchandise on account, $20,000, terms 2/10, n/30.
28 Paid invoice of August 15 in full
(a) Assuming that purchases are recorded at gross amounts and that discounts are to be recorded when taken:
(1) Prepare general journal entries to record the transactions.
(2) Describe how the various items would be shown in the financial statements.
(b) Assuming that purchases are recorded at net amounts and that discounts lost are treated as financial expenses:
(1) Prepare general journal entries to enter the transactions.
(2) Prepare the adjusting entry necessary on August 31 if financial statements are to be prepared at that time.
(3) Describe how the various items would be shown in the financial statements.
(c) Which of the two methods do you prefer and why?

Inventory Adjustments Dimitri Company, a manufacturer of small tools, provided

Inventory Adjustments Dimitri Company, a manufacturer of small tools, provided the following information from its accounting records for the year ended December 31, 2010. Additional information is as follows.
1. Included in the physical count were tools billed to a customer f.o.b. shipping point on December 31, 2010. These tools had a cost of $31,000 and were billed at $40,000. The shipment was on Dimitri’s loading dock waiting to be picked up by the common carrier.
2. Goods were in transit from a vendor to Dimitri on December 31, 2010. The invoice cost was $76,000, and the goods were shipped f.o.b. shipping point on December 29, 2010.
3. Work in process inventory costing $30,000 was sent to an outside processor for plating on December 30, 2010.
4. Tools returned by customers and held pending inspection in the returned goods area on December 31, 2010, were not included in the physical count. On January 8, 2011, the tools costing $32,000 were inspected and returned to inventory. Credit memos totaling $47,000 were issued to the customers on the same date.
5. Tools shipped to a customer f.o.b. destination on December 26, 2010, were in transit at December 31, 2010, and had a cost of $26,000. Upon notification of receipt by the customer on January 2, 2011, Dimitri issued a sales invoice for $42,000.
6. Goods, with an invoice cost of $27,000, received from a vendor at 5:00 p.m. on December 31, 2010, were recorded on a receiving report dated January 2, 2011. The goods were not included in the physical count, but the invoice was included in accounts payable at December 31, 2010.
7. Goods received from a vendor on December 26, 2010, were included in the physical count. However, the related $56,000 vendor invoice was not included in accounts payable at December 31, 2010, because the accounts payable copy of the receiving report was lost.
8. On January 3, 2011, a monthly freight bill in the amount of $8,000 was received. The bill specifically related to merchandise purchased in December 2010, one-half of which was still in the inventory at December 31, 2010. The freight charges were not included in either the inventory or in accounts payable at December 31, 2010.Using the format shown below, prepare a schedule of adjustments as of December 31, 2010, to the initial amounts per Dimitri’s accounting records. Show separately the effect, if any, of each of the eight transactions on the December 31, 2010, amounts. If the transactions would have no effect on the initial amount shown, enterNONE.


Inventory Adjustments Dimitri Company, a manufacturer of small t

Various Inventory Issues The following independent situations relate to inventory accounting.

Various Inventory Issues The following independent situations relate to inventory accounting.
1. Kim Co. purchased goods with a list price of $175,000, subject to trade discounts of 20% and 10%, with no cash discounts allowable. How much should Kim Co. record as the cost of these goods?
2. Keillor Company  inventory of $1,100,000 at December 31, 2010, was based on a physical count of goods priced at cost and before any year-end adjustments relating to the following items.
a. Goods shipped from a vendor f.o.b. shipping point on December 24, 2010, at an invoice cost of $69,000 to Keillor Company were received on January 4, 2011.
b. The physical count included $29,000 of goods billed to Sakic Corp. f.o.b. shipping point on December 31, 2010. The carrier picked up these goods on January 3, 2011. What amount should Keillor report as inventory on its balance sheet?
3. Zimmerman Corp. had 1,500 units of part M.O. on hand May 1, 2010, costing $21 each. Purchases of part M.O. during May were as follows.
Units Unit Cost
May 9 2,000 $22.00
17 3,500 23.00
26 1,000 24.00
A physical count on May 31, 2010, shows 2,000 units of part M.O. on hand. Using the FIFO method, what is the cost of part M.O. inventory at May 31, 2010? Using the LIFO method, what is the inventory cost? Using the average cost method, what is the inventory cost?
4. Ashbrook Company adopted the dollar-value LIFO method on January 1, 2010 (using internal price indexes and multiple pools). The following data are available for inventory pool A for the 2 years following adoption of LIFO.
At Base- At Current-
Inventory Year Cost Year Cost
1/1/10 $200,000 $200,000
12/31/10 240,000 264,000
12/31/11 256,000 286,720
Computing an internal price index and using the dollar-value LIFO method, at what amount should the inventory be reported at December 31, 2011?
5. Donovan Inc., a retail store chain, had the following information in its general ledger for the year 2011.
Merchandise purchased for resale $909,400
Interest on notes payable to vendors 8,700
Purchase returns 16,500
Freight-in 22,000
Freight-out 17,100
Cash discounts on purchases 6,800
What is Donovan  Inventoriable cost for 2010? Answer each of the preceding questions about inventories, and explain your answers.

Dollar-Value LIFO The following information relates to the Choctaw Company.

Dollar-Value LIFO The following information relates to the Choctaw Company. Use the dollar-value LIFO method to compute the ending inventory for Choctaw Company for 2007 through2011.


Dollar-Value LIFO The following information relates to the Choct

Dollar-Value LIFO Presented below is information related to Martin Company.

Dollar-Value LIFO Presented below is information related to Martin Company. Compute the ending inventory for Martin Company for 2007 through 2012 using the dollar-value LIFO method.


Dollar-Value LIFO Presented below is information related to Mart

Dollar-Value LIFO The dollar-value LIFO method was adopted by King Corp. on January 1, 2010.

Dollar-Value LIFO The dollar-value LIFO method was adopted by King Corp. on January 1, 2010. Its inventory on that date was $160,000. On December 31, 2010, the inventory at prices existing on that date amounted to $151,200. The price level at January 1, 2010, was 100, and the price level at December 31, 2010, was 112.
(a) Compute the amount of the inventory at December 31, 2010, under the dollar-value LIFO method.
(b) On December 31, 2011, the inventory at prices existing on that date was $195,500, and the price level was 115. Compute the inventory on that date under the dollar-value LIFO method.

(Dollar-Value LIFO) Sisko Company has used the dollar-value LIFO method for inventory

(Dollar-Value LIFO) Sisko Company has used the dollar-value LIFO method for inventory cost determination for many years. The following data were extracted from Sisko records. Calculate the index used for 2010 that yielded the aboveresults.


(Dollar-Value LIFO) Sisko Company has used the dollar-value LIFO

Alternative Inventory Methods Comprehensive Belanna Corporation began

Alternative Inventory Methods”Comprehensive Belanna Corporation began operations on December 1, 2010. The only inventory transaction in 2010 was the purchase of inventory on December 10, 2010, at a cost of $20 per unit. None of this inventory was sold in 2010. Relevant information is as follows.
Ending inventory units
December 31, 2010 100
December 31, 2011, by purchase date
December 2, 2011 100
July 20, 2011 30 130
During the year the following purchases and sales were made. The company uses the periodic inventory method.
(a) Determine ending inventory under
(1) Specific identification,
(2) FIFO,
(3) LIFO, and
(4) Average cost.
(b) Determine ending inventory using dollar-value LIFO. Assume that the December 2, 2011, purchase cost is the current cost ofinventory.


Alternative Inventory Methods—Comprehensive Belanna Corporation

LIFO Effect The following example was provided to encourage the use of the LIFO method.

LIFO Effect The following example was provided to encourage the use of the LIFO method. In a nutshell, LIFO subtracts inflation from inventory costs, deducts it from taxable income, and records it in a LIFO reserve account on the books. The LIFO benefit grows as inflation widens the gap between current-year and past-year (minus inflation) inventory costs. This gap is:
(a) Explain what is meant by the LIFO reserve account.
(b) How does LIFO subtract inflation from inventory costs?
(c) Explain how the cash flow of $174,400 in this example was computed. Explain why this amount may not be correct.
(d) Why does a company that uses LIFO have extra cash? Explain whether this situation will alwaysexist.


LIFO Effect The following example was provided to encourage the

FIFO and LIFO ”Periodic Tom Brady Shop began operations on January 2, 2010.

FIFO and LIFO—Periodic Tom Brady Shop began operations on January 2, 2010. The following stock record card for footballs was taken from the records at the end of the year. A physical inventory on December 31, 2010, reveals that 110 footballs were in stock. The bookkeeper informs you that all the discounts were taken. Assume that Tom Brady Shop uses the invoice price less discount for recording purchases.
(a) Compute the December 31, 2010, inventory using the FIFO method.
(b) Compute the 2010 cost of goods sold using the LIFO method.
(c) What method would you recommend to the owner to minimize income taxes in 2010, using the inventory information for footballs as aguide?

Gross Profit Method Astaire Company uses the gross profit method to estimate

Gross Profit Method Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May.
Inventory, May 1 $ 160,000
Purchases (gross) 640,000
Freight-in 30,000
Sales 1,000,000
Sales returns 70,000
Purchase discounts 12,000
(a) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of sales.
(b) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost.

FIFO and LIFO Effects You are the vice president of finance of Mickiewicz Corporation,

FIFO and LIFO Effects You are the vice president of finance of Mickiewicz Corporation, a retail company that prepared two different schedules of gross margin for the first quarter ended March 31, 2010. These schedules appear below.
Sales Cost of Gross
($5 per unit) Goods Sold Margin
Schedule 1 $150,000 $124,900 $25,100
Schedule 2 150,000 129,600 20,400
The computation of cost of goods sold in each schedule is based on the following data. Peggy Fleming, the president of the corporation, cannot understand how two different gross margins can be computed from the same set of data. As the vice president of finance you have explained to Ms. Fleming that the two schedules are based on different assumptions concerning the flow of inventory costs, i.e., FIFO and LIFO. Schedules 1 and 2 were not necessarily prepared in this sequence of cost flow assumptions. Prepare two separate schedules computing cost of goods sold and supporting schedules showing the composition of the ending inventory under both cost flow assumptions (assume periodicsystem).

FIFO and LIFO, Income Statement Presentation The board of directors of Oksana

FIFO and LIFO, Income Statement Presentation The board of directors of Oksana Corporation is considering whether or not it should instruct the accounting department to change from a first-in, first-out (FIFO) basis of pricing inventories to a last-in, first-out (LIFO) basis. The following information is available.
Sales 20,000 units @ $50
Inventory, January 1 6,000 units @ 20
Purchases 6,000 units @ 22
10,000 units @ 25
7,000 units @ 30
Inventory, December 31 9,000 units @
Operating expenses $200,000
Prepare a condensed income statement for the year on both bases for comparative purposes.

FIFO and LIFO—Periodic and Perpetual The following is a record of Cannondale Company

FIFO and LIFO Periodic and Perpetual The following is a record of Cannondale Company transactions for Boston Teapots for the month of May 2010.
(a) Assuming that perpetual inventories are not maintained and that a physical count at the end of the month shows 510 units on hand, what is the cost of the ending inventory using?
(1) FIFO and
(2) LIFO?
(b) Assuming that perpetual records are maintained and they tie into the general ledger, calculate the ending inventory using (1) FIFO and (2)LIFO.

FIFO and LIFO—Periodic and Perpetual The following is a record

Compute FIFO, LIFO, Average Cost Periodic Presented below is information related to radios

Compute FIFO, LIFO, Average Cost”Periodic Presented below is information related to radios for the Couples Company for the month of July.
(a) Assuming that the periodic inventory method is used, compute the inventory cost at July 31 under each of the following cost flow assumptions.
(1) FIFO.
(2) LIFO.
(3) Weighted-average.
(b) Answer the following questions.
(1) Which of the methods used above will yield the lowest figure for gross profit for the income statement? Explain why.
(2) Which of the methods used above will yield the lowest figure for ending inventory for the balance sheet? Explain why

Compute FIFO, LIFO, Average Cost—Periodic Presented below is inf.

FIFO, LIFO, and Average Cost Inventory Esplanade Company was formed on December 1, 2009.

FIFO, LIFO, and Average Cost Inventory Esplanade Company was formed on December 1, 2009. The following information is available from Esplanade inventory records for Product BAP.
Units Unit Cost
January 1, 2010 (beginning inventory) 600 $ 8.00
Purchases:
January 5, 2010 1,100 9.00
January 25, 2010 1,300 10.00
February 16, 2010 800 11.00
March 26, 2010 600 12.00
A physical inventory on March 31, 2010, shows 1,500 units on hand. Prepare schedules to compute the ending inventory at March 31, 2010, under each of the following inventory methods.
(a) FIFO.
(b) LIFO.
(c) Weighted-average.

Lower-of-Cost-or-Market Remmers Company manufactures desks. Most

Lower-of-Cost-or-Market Remmers Company manufactures desks. Most of the company desks are standard models and are sold on the basis of catalog prices. At December 31, 2010, the following finished desks appear in the company  inventory. The 2010 catalog was in effect through November 2010 and the 2011 catalog is effective as of December 1, 2010. All catalog prices are net of the usual discounts. Generally, the company attempts to obtain a 20% gross margin on selling price and has usually been successful in doing so. At what amount should each of the four desks appear in the company December 31, 2010, inventory, assuming that the company has adopted a lower-of-FIFO-cost-or-market approach for valuation of inventories on an individual-item basis?

Lower-of-Cost-or-Market Remmers Company manufactures desks. Most

Treatment of Various Costs Allegro Supply Company, a newly formed corporation

Treatment of Various Costs Allegro Supply Company, a newly formed corporation, incurred the following expenditures related to Land, to Buildings, and to Machinery and Equipment.
Abstract company fee for title search $520
Architect fees 3,170
Cash paid for land and dilapidated building thereon 92,000
Removal of old building $20,000
Less: Salvage 5,500 14,500
Interest on short-term loans during construction 7,400
Excavation before construction for basement 19,000
Machinery purchased (subject to 2% cash discount, which was not taken) 65,000
Freight on machinery purchased 1,340
Storage charges on machinery, necessitated by non-completion of
building when machinery was delivered 2,180
New building constructed (building construction took 6 months from
date of purchase of land and old building) 485,000
Assessment by city for drainage project 1,600
Hauling charges for delivery of machinery from storage to new building 620
Installation of machinery 2,000
Trees, shrubs, and other landscaping after completion of building
(Permanent in nature) 5,400
Determine the amounts that should be debited to Land, to Buildings, and to Machinery and Equipment. Assume the benefits of capitalizing interest during construction exceed the cost of implementation. Indicate how any costs not debited to these accounts should be recorded.

FIFO, LIFO, and Average Cost Determination LoBianco Companys record of transactions

FIFO, LIFO, and Average Cost Determination LoBianco Companys record of transactions for the month of April was as follows.
(a) Assuming that periodic inventory records are kept, compute the inventory at April 30 using
(1) LIFO and
(2) Average cost.
(b) Assuming that perpetual inventory records are kept in both units and dollars, determine the inventory at April 30 using
(1) FIFO and
(2) LIFO.
(c) Compute cost of goods sold assuming periodic inventory procedures and inventory priced at FIFO.
(d) In an inflationary period, which inventory method”FIFO, LIFO, average cost will show the highest net income?

FIFO, LIFO, and Average Cost Determination LoBianco Company’s re

FIFO and LIFO—Periodic and Perpetual Inventory information for Part 311

FIFO and LIFO—Periodic and Perpetual Inventory information for Part 311 of Seminole Corp. discloses the following information for the month of June.
June 1 Balance 300 units @ $10 June 10 Sold 200 units @ $24
11 Purchased 800 units @ $11 15 Sold 500 units @ $25
20 Purchased 500 units @ $13 27 Sold 250 units @ $27
(a) Assuming that the periodic inventory method is used, compute the cost of goods sold and ending inventory under
(1) LIFO and
(2) FIFO.
(b) Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the value of the ending inventory at LIFO?
(c) Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the gross profit if the inventory is valued at FIFO?
(d) Why is it stated that LIFO usually produces a lower gross profit than FIFO?

The net income per books of Adamson Company was determined

The net income per books of Adamson Company was determined without knowledge of the errors indicated below. Prepare a work sheet to show the adjusted net income figure for each of the 6 years after taking into account the inventory errors.

(Inventory Errors) The net income per books of Adamson Company

Wednesday, February 17, 2016

Amsterdam Company uses a periodic inventory system. For April

Amsterdam Company uses a periodic inventory system. For April, when the company sold 600 units, the following information is available. Compute the April 30 inventory and the April cost of goods sold using the average costmethod.

Amsterdam Company uses a periodic inventory system. For April, w

Inventory Errors Periodic Thomason Company makes the following errors during

Inventory Errors ”Periodic Thomason Company makes the following errors during the current year. (In all cases, assume ending inventory in the following year is correctly stated.)
1. Both ending inventory and purchases and related accounts payable are understated. (Assume this purchase was recorded and paid for in the following year.)
2. Ending inventory is overstated, but purchases and related accounts payable are recorded correctly.
3. Ending inventory is correct, but a purchase on account was not recorded. (Assume this purchase was recorded and paid for in the following year.)
Indicate the effect of each of these errors on working capital, current ratio (assume that the current ratio is greater than 1), retained earnings, and net income for the current year and the subsequent year.

Periodic versus Perpetual Entries Chippewas Company sells one product.

Periodic versus Perpetual Entries Chippewas Company sells one product. Presented below is information for January for Chippewas Company.
Jan. 1 Inventory 100 units at $6 each 4 Sale 80 units at $8 each
11 Purchase 150 units at $6.50 each
13 Sale 120 units at $8.75 each
20 Purchase 160 units at $7 each
27 Sale 100 units at $9 each
Chippewas uses the FIFO cost flow assumption. All purchases and sales are on account.
(a) Assume Chippewas uses a periodic system. Prepare all necessary journal entries, including the end-of-month closing entry to record cost of goods sold. A physical count indicates that the ending inventory for January is 110 units.
(b) Compute gross profit using the periodic system.
(c) Assume Chippewas uses a perpetual system. Prepare all necessary journal entries.
(d) Compute gross profit using the perpetual system.

Garcia Corporation purchased a truck by issuing an $80,000, 4-year

Garcia Corporation purchased a truck by issuing an $80,000, 4-year, zero interest-bearing notes to Equinox Inc. The market rate of interest for obligations of this nature is 10%. Prepare the journal entry to record the purchase of this truck.

Gross Profit Method Astaire Company uses the gross profit method to estimate

Gross Profit Method Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May.
Inventory, May 1 $ 160,000
Purchases (gross) 640,000
Freight-in 30,000
Sales 1,000,000
Sales returns 70,000
Purchase discounts 12,000
(a) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of sales.
(b) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost.

Purchases Recorded, Gross Method Wizard Industries purchased $12,000

Purchases Recorded, Gross Method Wizard Industries purchased $12,000 of merchandise on February 1, 2010, subject to a trade discount of 10% and with credit terms of 3/15, n/60. It returned $3,000 (gross price before trade or cash discount) on February 4. The invoice was paid on February 13.
(a) Assuming that Wizard uses the perpetual method for recording merchandise transactions, record the purchase, return, and payment using the gross method.
(b) Assuming that Wizard uses the periodic method for recording merchandise transactions, record the purchase, return, and payment using the gross method.
(c) At what amount would the purchase on February 1 be recorded if the net method were used?

Matlock Company uses a perpetual inventory system. Its beginning inventory

Matlock Company uses a perpetual inventory system. Its beginning inventory consists of 50 units that cost $34 each. During June, the company purchased 150 units at $34 each, returned 6 units for credit, and sold 125 units at $50 each. Journalize the June transactions.

Purchases Recorded Net Presented below are transactions related to Guillen, Inc

Purchases Recorded Net Presented below are transactions related to Guillen, Inc. May 10 Purchased goods billed at $20,000 subject to cash discount terms of 2/10, n/60
11 Purchased goods billed at $15,000 subject to terms of 1/15, n/30
19 Paid invoice of May 10
24 Purchased goods billed at $11,500 subject to cash discount terms of 2/10, n/30
(a) Prepare general journal entries for the transactions above under the assumption that purchases are to be recorded at net amounts after cash discounts and that discounts lost are to be treated as financial expense.
(b) Assuming no purchase or payment transactions other than those given above, prepare the adjusting entry required on May 31 if financial statements are to be prepared as of that date.

Determining Merchandise Amounts Periodic Two or more items are omitted

Determining Merchandise Amounts Periodic Two or more items are omitted in each of the following tabulations of income statement data. Fill in the amounts that are missing

Determining Merchandise Amounts—Periodic Two or more items are o.

Inventory Errors At December 31, 2010, Dwight Corporation reported current assets of $390,000 and current liabilities of $200,000. The following items may have been recorded incorrectly. Dwight uses the periodic method. 1. Goods purchased costing $22,000 were shipped f.o.b. shipping point by a supplier on December 28. Dwight received and recorded the invoice on December 29, 2010, but the goods were not included in Dwight’s physical count of inventory because they were not received until January 4, 2011. 2. Goods purchased costing $20,000 were shipped f.o.b. destination by a supplier on December 26. Dwight received and recorded the invoice on December 31, but the goods were not included in Dwight’s 2010 physical count of inventory because they were not received until January 2, 2011. 3. Goods held on consignment from Kishi Company were included in Dwight’s December 31, 2010, physical count of inventory at $13,000. 4. Freight-in of $3,000 was debited to advertising expense on December 28, 2010. (a) Compute the current ratio based on Dwight’s balance sheet. (b) Re-compute the current ratio after corrections are made. (c) By what amount will income (before taxes) be adjusted up or down as a result of the corrections?

Inventoriable Costs ”Error Adjustments Werth Company asks you to review its December 31, 2010, inventory values and prepare the necessary adjustments to the books. The following information is given to you.
1. Werth uses the periodic method of recording inventory. A physical count reveals $234,890 of inventory on hand at December 31, 2010.
2. Not included in the physical count of inventory is $10,420 of merchandise purchased on December 15 from Browser. This merchandise was shipped f.o.b. shipping point on December 29 and arrived in January. The invoice arrived and was recorded on December 31.
3. Included in inventory is merchandise sold to Bubbey on December 30, f.o.b. destination. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale on account for $12,800 on December 31. The merchandise cost $7,350, and Bubbey received it on January 3.
4. Included in inventory was merchandise received from Dudley on December 31 with an invoice price of $15,630. The merchandise was shipped f.o.b. destination. The invoice, which has not yet arrived, has not been recorded.
5. Not included in inventory is $8,540 of merchandise purchased from Minsky Industries. This merchandise was received on December 31 after the inventory had been counted. The invoice was received and recorded on December 30.
6. Included in inventory was $10,438 of inventory held by Werth on consignment from Jackel Industries.
7. Included in inventory is merchandise sold to Sims f.o.b. shipping point. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale for $18,900 on December 31. The cost of this merchandise was $11,520, and Sims received the merchandise on January 5.
8. Excluded from inventory was a carton labeled Please accept for credit. This carton contains merchandise costing $1,500 which had been sold to a customer for $2,600. No entry had been made to the books to reflect the return, but none of the returned merchandise seemed damaged.
(a) Determine the proper inventory balance for Werth Company at December 31, 2010.
(b) Prepare any correcting entries to adjust inventory to its proper amount at December 31, 2010. Assume the books have not been closed.

Inventory Errors At December 31, 2010, Dwight Corporation reported current assets

Inventory Errors At December 31, 2010, Dwight Corporation reported current assets of $390,000 and current liabilities of $200,000. The following items may have been recorded incorrectly. Dwight uses the periodic method.
1. Goods purchased costing $22,000 were shipped f.o.b. shipping point by a supplier on December 28. Dwight received and recorded the invoice on December 29, 2010, but the goods were not included in Dwight physical count of inventory because they were not received until January 4, 2011.
2. Goods purchased costing $20,000 were shipped f.o.b. destination by a supplier on December 26. Dwight received and recorded the invoice on December 31, but the goods were not included in Dwight 2010 physical count of inventory because they were not received until January 2, 2011.
3. Goods held on consignment from Kishi Company were included in Dwight December 31, 2010, physical count of inventory at $13,000.
4. Freight-in of $3,000 was debited to advertising expense on December 28, 2010.
(a) Compute the current ratio based on Dwight balance sheet.
(b) Re-compute the current ratio after corrections are made.
(c) By what amount will income (before taxes) be adjusted up or down as a result of the corrections?

Navajo Corporation traded a used truck (cost $20,000, accumulated depreciation $18,000)

Navajo Corporation traded a used truck (cost $20,000, accumulated depreciation $18,000) for a small computer worth $3,300. Navajo also paid $500 in the transaction. Prepare the journal entry to record the exchange. (The exchange has commercial substance.)

Garcia Corporation purchased a truck by issuing an $80,000, 4-year, zero i

Garcia Corporation purchased a truck by issuing an $80,000, 4-year, zero interest-bearing notes to Equinox Inc. The market rate of interest for obligations of this nature is 10%. Prepare the journal entry to record the purchase of this truck.

On January 1, 2011, Irwin Animation sold a truck to Peete Finance for $33,000 and immediately leased it back. The truck was carried on Irwin’s books at $28,000. The term of the lease is 5 years, and title transfers to Irwin at lease-end. The lease requires five equal rental payments of $8,705 at the end of each year. The appropriate rate of interest is 10%, and the truck has a useful life of 5 years with no salvage value. Prepare Irwin’s 2011 journal entries.

The following facts pertain to a noncollectable lease agreement between Mooney Leasing Company and Rode Company, a lessee.
Inception date: May 1, 2014
Annual lease payment due at the beginning of
each year, beginning with May 1, 2014 ........ $21,227.65
Bargain-purchase option price at end of lease term ...... $ 4,000.00
Lease term ........................ 5 years
Economic life of leased equipment .............. 10 years
Lessor’s cost ..................... $65,000.00
Fair value of asset at May 1, 2014 ............ $91,000.00
Lessor implicit rate .................... 10%
Lessee incremental borrowing rate .............. 10%

The conductibility of the lease payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor. The lessee assumes responsibility for all executor costs.

Instructions
(a) Discuss the nature of this lease to Rode Company.
(b) Discuss the nature of this lease to Mooney Company.
(c) Prepare a lease amortization schedule for Rode Company for the 5-year lease term.
(d) Prepare the journal entries on the lessee books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2014 and 2015. Rode annual accounting period ends on December 31. Reversing entries are used by Rode.

On January 1, 2011, Irwin Animation sold a truck to Peete Finance for $33,000

On January 1, 2011, Irwin Animation sold a truck to Peete Finance for $33,000 and immediately leased it back. The truck was carried on Irwin books at $28,000. The term of the lease is 5 years, and title transfers to Irwin at lease-end. The lease requires five equal rental payments of $8,705 at the end of each year. The appropriate rate of interest is 10%, and the truck has a useful life of 5 years with no salvage value. Prepare Irwin 2011 journal entries.

Castle Leasing Company signs a lease agreement on January 1, 2014

Castle Leasing Company signs a lease agreement on January 1, 2014, to lease electronic equipment to Jan Way Company. The term of the noncancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement:
1. Jan Way has the option to purchase the equipment for $16,000 upon termination of the lease.
2. The equipment has a cost and fair value of $160,000 to Castle Leasing Company. The useful economic life is 2 years, with a salvage value of $16,000.
3. Jan Way Company is required to pay $5,000 each year to the lessor for executory costs.
4. Castle Leasing Company desires to earn a return of 10% on its investment.
5. Collectibility of the payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor.
Instructions
(a) Prepare the journal entries on the books of Castle Leasing to reflect the payments received under the lease and to recognize income for the years 2014 and 2015.
(b) Assuming that Jan Way Company exercises its option to purchase the equipment on December 31, 2015, prepare the journal entry to reflect the sale on Castles books.

Floyd Corporation has the following four items in its ending inventory.

Floyd Corporation has the following four items in its ending inventory. 

Floyd Corporation has the following four items in its ending

Inventoriable Costs Perpetual Bradford Machine Company maintains

Invariable Costs”Perpetual Bradford Machine Company maintains a general ledger account for each class of inventory, debiting such accounts for increases during the period and crediting them for decreases. The transactions below relate to the Raw Materials inventory account, which is debited for materials purchased and credited for materials requisitioned for use.
1. An invoice for $8,100, terms f.o.b. destination, was received and entered January 2, 2011. The receiving report shows that the materials were received December 28, 2010.
2. Materials costing $7,300 were returned to the supplier on December 29, 2010, and were shipped f.o.b. shipping point. The return was entered on that date, even though the materials are not expected to reach the supplier place of business until January 6, 2011.
3. Materials costing $28,000, shipped f.o.b. destination, were not entered by December 31, 2010, œbecause they were in a railroad car on the company siding on that date and had not been unloaded.
4. An invoice for $7,500, terms f.o.b. shipping point, was received and entered December 30, 2010. The receiving report shows that the materials were received January 4, 2011, and the bill of lading shows that they were shipped January 2, 2011.
5. Materials costing $19,800 were received December 30, 2010, but no entry was made for them because “they were ordered with a specified delivery of no earlier than January 10, 2011.Prepare correcting general journal entries required at December 31, 2010, assuming that the books have not been closed.

Inventoriable Costs in your audit of Garza Company, you find that a physical inventory on December 31, 2010, showed merchandise with a cost of $441,000 was on hand at that date. You also discover the following items were all excluded from the $441,000. 1. Merchandise of $61,000 which is held by Garza on consignment. The consignor is the Bontemps Company. 2. Merchandise costing $33,000 which was shipped by Garza f.o.b. destination to a customer on December 31, 2010. The customer was expected to receive the merchandise on January 6, 2011. 3. Merchandise costing $46,000 which was shipped by Garza f.o.b. shipping point to a customer on December 29, 2010. The customer was scheduled to receive the merchandise on January 2, 2011. 4. Merchandise costing $73,000 shipped by a vendor f.o.b. destination on December 30, 2010, and received by Garza on January 4, 2011. 5. Merchandise costing $51,000 shipped by a vendor f.o.b. shipping point on December 31, 2010, and received by Garza on January 5, 2011.Based on the above information, calculate the amount that should appear on Garza’s balance sheet at December 31, 2010, for inventory.

Inventoriable Costs Assume that in an annual audit of Webber Inc. at December 31, 2010, you. Find the following transactions near the closing date.
1. A special machine, fabricated to order for a customer, was finished and specifically segregated in the back part of the shipping room on December 31, 2010. The customer was billed on that date and the machine excluded from inventory although it was shipped on January 4, 2011.
2. Merchandise costing $2,800 was received on January 3, 2011 and the related purchase invoice recorded January 5. The invoice showed the shipment was made on December 29, 2010, f.o.b. destination.
3. A packing case containing a product costing $3,400 was standing in the shipping room when the physical inventory was taken. It was not included in the inventory because it was marked Hold for shipping instructions. Your investigation revealed that the customer order was dated December 18, 2010, but that the case was shipped and the customer billed on January 10, 2011. The product was a stock item of your client.
4. Merchandise costing $720 was received on December 28, 2010, and the invoice was not recorded. You located it in the hands of the purchasing agent; it was marked on consignment.
5. Merchandise received on January 6, 2011, costing $680 was entered in the purchase journal on January 7, 2011. The invoice showed shipment was made f.o.b. supplier warehouse on December 31, 2010. Because it was not on hand at December 31, it was not included in inventory. Assuming that each of the amounts is material, state whether the merchandise should be included in the client inventory, and give your reason for your decision on each item

Inventoriable Costs in your audit of Garza Company, you find that a physical

Inventoriable Costs in your audit of Garza Company, you find that a physical inventory on December 31, 2010, showed merchandise with a cost of $441,000 was on hand at that date. You also discover the following items were all excluded from the $441,000.
1. Merchandise of $61,000 which is held by Garza on consignment. The consignor is the Bontemps Company.
2. Merchandise costing $33,000 which was shipped by Garza f.o.b. destination to a customer on December 31, 2010. The customer was expected to receive the merchandise on January 6, 2011.
3. Merchandise costing $46,000 which was shipped by Garza f.o.b. shipping point to a customer on December 29, 2010. The customer was scheduled to receive the merchandise on January 2, 2011.
4. Merchandise costing $73,000 shipped by a vendor f.o.b. destination on December 30, 2010, and received by Garza on January 4, 2011.
5. Merchandise costing $51,000 shipped by a vendor f.o.b. shipping point on December 31, 2010, and received by Garza on January 5, 2011.Based on the above information, calculate the amount that should appear on Garza balance sheet at December 31, 2010, for inventory.

Data for Amsterdam Company are presented below. Compute the April 30 inventory

Data for Amsterdam Company are presented below. Compute the April 30 inventory and the April cost of goods sold using the FIFOmethod.

Data for Amsterdam Company are presented below. Compute the April

Midori Company had ending inventory at end-of-year prices of $100,000

Midori Company had ending inventory at end-of-year prices of $100,000 at December 31, 2009; $119,900 at December 31, 2010; and $134,560 at December 31, 2011. The year-end price indexes were 100 at 12/31/09, 110 at 12/31/10, and 116 at 12/31/11. Compute the ending inventory for Midori Company for 2009 through 2011 using the dollar-value LIFO method.

Arna, Inc. uses the dollar-value LIFO method of computing its inventory. Data for the past 3 years follow.

Arna, Inc. uses the dollar-value LIFO method of computing its inventory. Data for the past 3 years follow.
Year Ended December 31 Inventory at Current-year Cost Price Index
2009 $19,750 100
2010 22,140 108
2011 25,935 114
Compute the value of the 2010 and 2011 inventories using the dollar-value LIFO method.

Inventoriable Costs Presented below is a list of items that may or may not be reported as inventory

Inventoriable Costs Presented below is a list of items that may or may not be reported as inventory in a company December 31 balance sheet.
1. Goods sold on an installment basis (bad debts can be reasonably estimated).
2. Goods out on consignment at another company store.
3. Goods purchased f.o.b. shipping point that is in transit at December 31.
4. Goods purchased f.o.b. destination that are in transit at December 31.
5. Goods sold to another company, for which our company has signed an agreement to repurchase at a set price that covers all costs related to the inventory.
6. Goods sold where large returns are predictable.
7. Goods sold f.o.b. shipping point that is in transit at December 31.
8. Freight charges on goods purchased.
9. Interest costs incurred for inventories that are routinely manufactured.
10. Materials on hand not yet placed into production by a manufacturing firm.
11. Costs incurred to advertise goods held for resale.
12. Office supplies.
13. Raw materials on which a manufacturing firm has started production, but which are not completely processed.
14. Factory supplies.
15. Goods held on consignment from another company.
16. Costs identified with units completed by a manufacturing firm, but not yet sold.
17. Goods sold f.o.b. destination that are in transit at December 31.
18. Short-term investments in stocks and bonds that will be resold in the near future. Indicate which of these items would typically be reported as inventory in the financial statements. If an item should not be reported as inventory, indicate how it should be reported in the financial statements.

Included in the December 31 trial balance of Rivera Company are the following assets.

Included in the December 31 trial balance of Rivera Company are the following assets.
Cash $ 190,000 Work in process $200,000
Equipment (net) 1,100,000 Receivables (net) 400,000
Prepaid insurance 41,000 Patents 110,000
Raw materials 335,000 Finished goods 170,000
Prepare the current assets section of the December 31 balance sheet.

Matlock Company uses a perpetual inventory system. Its beginning inventory consists

Matlock Company uses a perpetual inventory system. Its beginning inventory consists of 50 units that cost $34 each. During June, the company purchased 150 units at $34 each, returned 6 units for credit, and sold 125 units at $50 each. Journalize the June transactions.

Stallman Company took a physical inventory on December 31 and determined that goods

Stallman Company took a physical inventory on December 31 and determined that goods costing $200,000 were on hand. Not included in the physical count were $25,000 of goods purchased from Pelzer Corporation, f.o.b. shipping point, and $22,000 of goods sold to Alvarez Company for $30,000, f.o.b. destination. Both the Pelzer purchase and the Alvarez sale were in transit at year-end. What amount should Stallman report as its December 31 inventory?

Bienvenu Enterprises reported cost of goods sold for 2010 of $1,400,000

Bienvenu Enterprises reported cost of goods sold for 2010 of $1,400,000 and retained earnings of $5,200,000 at December 31, 2010. Bienvenu later discovered that its ending inventories at December 31, 2009 and 2010, were overstated by $110,000 and $35,000, respectively. Determine the corrected amounts for 2010 cost of goods sold and December 31, 2010, retained earnings.

Amsterdam Company uses a periodic inventory system.


Amsterdam Company uses a periodic inventory system. For April, when the company sold 600 units, the following information is available. Compute the April 30 inventory and the April cost of goods sold using the average costmethod.

Amsterdam Company uses a periodic inventory system. For April, w

In an article that appeared in the Wall Street Journal, the phrases

n an article that appeared in the Wall Street Journal, the phrases phantom (paper) profits and high LIFO profits” through involuntary liquidation were used. Explain these phrases.

What is the dollar-value method of LIFO inventory valuation? What advantage does

What is the dollar-value method of LIFO inventory valuation? What advantage does the dollar-value method have over the specific goods approach of LIFO inventory valuation? Why will the traditional LIFO inventory costing method and the dollar-value LIFO inventory costing method produce different inventory valuations if the composition of the inventory base changes?

Describe the LIFO double-extension method. Using the following information

Describe the LIFO double-extension method. Using the following information compute the index at December 31, 2010, applying the double-extension method to a LIFO pool consisting of 25500 units of product A and 10,350 units of product B, the base-year cost of product A is $10.20 and of product B is $37.00. The price at December 31, 2010, for product A is $21.00 and for product B is $45.60.

How might a company obtain a price index in order to apply dollar-value LIFO?

How might a company obtain a price index in order to apply dollar-value LIFO?

FIFO, weighted-average, and LIFO methods are often used instead of specific identification

FIFO, weighted-average, and LIFO methods are often used instead of specific identification for inventory valuation purposes. Compare these methods with the specific identification method, discussing the theoretical propriety of each method in the determination of income and asset valuation.

Zonker Inc. purchases 500 units of an item at an invoice cost of $30,000.

Zonker Inc. purchases 500 units of an item at an invoice cost of $30,000. What is the cost per unit? If the goods are shipped f.o.b. shipping point and the freight bill was $1,500, what is the cost per unit if Zonker Inc. pays the freight charges? If these items were bought on 2/10, n/30 terms and the invoice and the freight bill were paid within the 10-day period, what would be the cost per unit?

Ford Motor Co. is considering alternate methods of accounting for

Ford Motor Co. is considering alternate methods of accounting for the cash discounts it takes when paying suppliers promptly. One method suggested was to report these discounts as financial income when payments are made. Comment on the propriety of this approach.

Distinguish between product costs and period costs as they relate to inventory.

Distinguish between product costs and period costs as they relate to inventory.

Define as applied to the valuation of inventories.

Define as applied to the valuation of inventories.

At the balance sheet date Clarkson Company held title to goods in transit amounting to $214,000.

At the balance sheet date Clarkson Company held title to goods in transit amounting to $214,000. This amount was omitted from the purchases figure for the year and also from the ending inventory. What is the effect of this omission on the net income for the year as calculated when the books are closed? What is the effect on the company financial position as shown in its balance sheet? Is materiality a factor in determining whether an adjustment for this item should be made?

Where, if at all, should the following items be classified

Where, if at all, should the following items be classified on a balance sheet?
(a) Goods out on approval to customers.
(b) Goods in transit that were recently purchased f.o.b. destination.
(c) Land held by a realty firm for sale.
(d) Raw materials.
(e) Goods received on consignment.
(f) Manufacturing supplies.

What is a product financing arrangement? How should product financing

What is a product financing arrangement? How should product financing arrangements be reported in the financial statements?

What is the difference between a perpetual inventory and a physical inventory?

What is the difference between a perpetual inventory and a physical inventory? If a company maintains a perpetual inventory, should its physical inventory at any date be equal to the amount indicated by the perpetual inventory records? Why?

Why inventories should be included in (a) A statement of financi

Why inventories should be included in
(a) A statement of financial position and
(b) The computation of net income?

In what ways are the inventory accounts of a retailing

In what ways are the inventory accounts of a retailing company different from those of a manufacturing company?