treamturos.comB PROBLEMSPS-1B (Various Inventory Issues) The following independent situations relate to inventory accounting.1. Hammer Co. purchased goods with a list price of $260,000, subject to trade discounts of 25% and10%, with no cash discounts allowable. How much should Hammer Co. record as the cost of thesegoods?2. Pine Company's inventory of $1,761,000 at December 31, 2014, was based on a physical count ofgoods 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 28, 2014, at an invoice cost of$85,500 to Pine Company were received on January 2, 2015.(b) The physical count included $61,000 of goods billed to Douglas Corp. f.o.b. shipping point onDecember 31, 2014. The carrier picked up these goods on January 1, 2015.What amount should Pine report as inventory on its balance sheet?Potter Corp. had 1,000 units of part Z65 on hand July 1, 2014, costing $62 each. Purchases of part Z65during July were as follows8.UnitsUnits CostJuly 3$63.000o 0 027A physical count on July 31, 2014, shows 1,500 units of part Z65 on hand. Using the FIFO method,what is the cost of part Z65 inventory at July 31, 2014? Using the LIFO method, what is the inventorycost? Using the average cost method, what is the inventory cost?4. Hsieh Company adopted the dollar-value LIFO method on January 1, 2014 (using internal price in-dexes and multiple pools). The following data are available for inventory pool A for the 2 years fol-lowing adoption of LIFO.At Base-At Current-InventoryYear CostYear Cost$334,000375,440449,0801/1/2014$334,00012/31/201412/31/2015412,000Computing an internal price index and using the dollar-value LIFO method, at what amount shouldthe inventory be reported at December 31, 2014?5. White Inc., a mega retail store, had the following information in its general ledger for the year 2014.Merchandise purchased for resaleInterest on notes payable to vendorsPurchase returns$2,684,10012,800121,60056,10031,10024,850Freight-inFreight-outCash discounts on purchasesWhat is White's inventoriable cost for 2014?InstructionsAnswer each of the preceding questions about inventories, and explain your answers.

Hi student Since there are multiple questions, we will answer only first question. If you want…

8-1B (Various Inventory Issues) The following independent situations relate to inventory accounting 1. Hammer Co. purchased goods with a list price of $260,000, subject to trade discounts of 25% and 10%, with no cash discounts allowable. How much should Hammer Co. record as the cost of these goods? 2. Pine Company's inventory of $1,761,000 at December 31, 2014, was base

8-1B (Various Inventory Issues) The following independent situations relate to inventory accounting 1. Hammer Co. purchased goods with a list price of $260,000, subject to trade discounts of 25% and 10%, with no cash discounts allowable. How much should Hammer Co. record as the cost of these goods? 2. Pine Company's inventory of $1,761,000 at December 31, 2014, was base

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter5: Inventories And Cost Of Goods Sold

Section: Chapter Questions

Problem 5.3DC

See similar textbooks

Similar questions

Lower of Cost or Market Garcia Company uses FIFO, and its inventory at the end of the year was recorded in the accounting records at $17,800. Due to technological changes in the market, Garcia would be able to replace its inventory for $16,500. Required: 1. Using the lower of cost or market method, what amount should Garcia report for inventory on its balance sheet at the end of the year? 2. Prepare the journal entry required to value the inventory at the lower of cost or market.
Inventory analysis Costco Wholesale Corporation (COST) and Wal-Mart Stores Inc. (WMT) compete against each other in general merchandise retailing, gas stations, pharmacies, and optical centers. Below is selected financial information for both companies from a recent year's financial statements (in millions): a. Determine for bom companies (1) the inventory turnover and (2) the days' sales in inventory. Round to one decimal place. b. Compare and interpret the inventory metrics computed in (a).
Refer to the information provided in RE8-4. If Paul Corporations inventory at January 1, 2019, had a cost and net realizable value of 300,000, prepare the journal entry to record the reductions to NRV for Paul Corporation assuming that Paul uses a periodic inventory system and the direct method. Paul Corporation uses FIFO and reports the following inventory information: Assuming Paul uses a perpetual inventory system and the direct method, prepare the journal entry to record the write-down of inventory.
The following are independent errors made by a company that uses the periodic inventory system: a. Goods in transit, purchased on credit and shipped FOB destination, 10,000, were included in purchases but not in the physical count of ending inventory. b. Purchase of a machine for 2,000 was expensed. The machine has a 4-year life, no residual value, and straight-line depreciation is used. c. Wages payable of 2,000 were not accrued. d. Payment of next years rent, 4,000, was recorded as rent expense. e. Allowance for doubtful accounts of 5,000 was not recorded. The company normally uses the aging method. f. Equipment with a book value of 70,000 and a fair value of 100,000 was sold at the beginning of the year. A 2-year, non-interest-bearing note for 129,960 was received and recorded at its face value, and a gain of 59,960 was recognized. No interest revenue was recorded and 14% is a fair rate of interest. Required: 1. Next Level Indicate the effect of each of the preceding errors on the companys assets, liabilities, shareholders equity, and net income in the year in which the error occurs. State whether the error causes an overstatement (+), an understatement (), or no effect (NE). 2. Prepare the correcting journal entry or entries required at the beginning of the year for each of the preceding errors, assuming the company discovers the error in the year after it was made. Ignore income taxes.
Refer to the information for Morgan Inc. above. If Morgan uses a perpetual inventory system, what is the cost of ending inventory under FIFO at April 30? a. $32,500 b. $38,400 c. $63,600 d. $69,500
Company Elmira reported the following cost of goods sold but later realized that an error had been made in ending inventory for year 2021. The correct inventory amount for 2021 was 32,000. Once the error is corrected, (a) how much is the restated cost of goods sold for 2021? and (b) how much is the restated cost of goods sold for 2022?
Company Edgar reported the following cost of goods sold but later realized that an error had been made in ending inventory for year 2021. The correct inventory amount for 2021 was 12,000. Once the error is corrected, (a) how much is the restated cost of goods sold for 2021? and (b) how much is the restated cost of goods sold for 2022?
Analyzing the Accounts Casey Company uses a perpetual inventory system and engaged in the following transactions: a. Made credit sales of $825,000. The cost of the merchandise sold was $560,000. b. Collected accounts receivable in the amount of $752,600. c. Purchased goods on credit in the amount of $574,300. d. Paid accounts payable in the amount of $536,200. Required: Prepare the journal entries necessary to record the transactions. Indicate whether each transaction increased cash, decreased cash, or had no effect on cash.
Discounts Nelson Company bought inventory for 50,000 on terms of 2/15, n/60. It pays for the first 37,500 of inventory purchased within the discount period and pays for the remaining 12,500 two months later. Required: 1. Prepare the journal entries to record the purchase and the payment under both the (a) gross price and (b) net price methods. Assume that Nelson uses the periodic inventory system. 2. Next Level Which of the two methods yields a conceptually preferable valuation of inventory?
Lower-of-cost-or market inventory Data on the physical inventory of Moyer Company as of December 31, 20Y9, are presented below. Quantity and cost data from the last purchases invoice of the year and the next-to-the-last purchases invoice are summarized as follows: Instructions Determine the inventory at cost and at the lower of cost or market, using the first-in, first-out method. Record the appropriate unit costs on an inventory sheet and complete the pricing of the inventory. When there are two different unit costs applicable to an item, proceed as follows: 1. Draw a line through the quantity, and insert the quantity and unit cost of the last purchase. 2. On the following line, insert the quantity and unit cost of the next-to-the-last purchase. 3. Total the cost and market columns and insert the lower of the two totals in the LCM column. The first item on the inventory sheet has been completed below as an example.
A physical count of merchandise inventory on December 31, 2013, revealed inventory costing 22,000. In the space below, list at least two possible reasons for this balance to be different from the estimate computed in requirement 3.
Kulsrud Company would like to estimate the current inventory level. Using the gross profit method and the following information, estimate the current inventory level for Kulsrud Company. Goods available for sale 100,000 Net sales 150,000 Normal gross profit as a percent of sales 40%