Part Two: Work OutProblem One:Tale Company had the following beginning inventory and purchases during 2002:Item XUnit costDateUnit'sBr. 14Jan. 1Inventory40015March 10Purchase20016May 9Sep. 22Purchase300Purchase25020Nov. 28Purchase10021At december 31, 2002, there were 550 units of X on hand.Sales of units were as follows:Jan. 15200 units at Br. 30April 1200 units at Br. 30Nov. 1300 units at Br. 35Required: Apply the four different methods of inventory costing to calculate endinginventory & Cost of merchandise sold under:Periodic inventory systemi)ii)Perpetual inventory system Problem TwoCorporation's ending inventory includes the following items.CommodityWUnit Market Price$3440Inventory QuantityUnit Cost Price$ 30405024Y4860262044Calculate lower of cost or market for the inventory20a) As a wholeb) Applied separately to each productsProblem Three:On October 5, 2001, NOON C. acquired a new machine at a cost of Birr 250,000. Themachine has a useful life of 5 years and salvace value of Br. 10,000. It is estimated that theequipment will produce 2,000,000 units of products throughout its life. The equipmentproduced 95,000 units and 300,000 units of products during the fiscal periods endingDecember 31, 2001 and December 31, 2002 respectively. On the basis of the above data,compute depreciation expense to be recorded on Dec. 31, 2002 using:i. The units of production methodii. The declining-balance methodiii. The sum-of-years-digits methodiv. The straight-line methodProblem Four:Equipment purchased on January, 3, 2008, for S80,000 was depreciated using straight linemethod based upon a 5 years life and $7,500 residual value. The equipment was sold onDecember 31, 2010 for $40,000. What is the gain on the sale of the equipment?

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Problem One: Tale Company had the following beginning inventory and purchases during 2002: Item X Unit cost Date Unit's Br. 14 Jan. 1 Inventory 400 15 March 10 Purchase 200 16 May 9 Sep. 22 Nov. 28 Purchase 300 Purchase 250 20 Purchase 100 21 At december 31, 2002, there were 550 units of X on hand. Sales of units were as follows: Jan.15 200 units at Br. 30 April 1 200 units at Br. 30 Nov. 1 300 units at Br. 35 Required: Apply the four different methods of inventory costing to calculate ending inventory & Cost of merchandise sold under: i) Periodic inventory system ii) Perpetual inventory system

Problem One: Tale Company had the following beginning inventory and purchases during 2002: Item X Unit cost Date Unit's Br. 14 Jan. 1 Inventory 400 15 March 10 Purchase 200 16 May 9 Sep. 22 Nov. 28 Purchase 300 Purchase 250 20 Purchase 100 21 At december 31, 2002, there were 550 units of X on hand. Sales of units were as follows: Jan.15 200 units at Br. 30 April 1 200 units at Br. 30 Nov. 1 300 units at Br. 35 Required: Apply the four different methods of inventory costing to calculate ending inventory & Cost of merchandise sold under: i) Periodic inventory system ii) Perpetual inventory system

Corporate Financial Accounting

14th Edition

ISBN:9781305653535

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter6: Inventories

Section: Chapter Questions

Problem 6.3BE: Perpetual inventory using LIFO Beginning inventory, purchases, and sales for Item 88-HX are as...

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( Appendix 6B) Inventory Costing Methods: Periodic System Harrington Company had the following data for inventory during a recent year: Assume that Harrington uses a periodic inventory accounting system. Required: 1. Using the FIFO, LIFO, and average cost methods, compute the ending inventory and cost of goods sold. ( Note: Use four decimal places for per-unit calculations and round all other numbers to the nearest dollar.) 2. CONCEPTUAL CONNECTION Which method will produce the most realistic amount for income? For inventory? 3. CONCEPTUAL CONNECTION Which method will produce the lowest amount paid for taxes?
Communication Golden Eagle Company began operations on April 1 by selling a single product. Data on purchases and sales for the year are as follows: Purchases: Sales: The president of the company, Connie Kilmer, has asked for your advice on which inventory cost flow method should be used for the 32,000-unit physical inventory that was taken on December 31. The company plans to expand its product line in the future and uses the periodic inventory system. Write a brief memo to Ms. Kilmer comparing and contrasting the LIFO and FIFO inventory cost flow methods and their potential impacts on the companys financial statements.
Lower-of-cost-or-market inventory Data on the physical inventory of Katus Products Co. as of December 31 follows: Description Inventory Quantity Market Value per Unit (Net Realizable Value) A54 37 56 C77 24 178 F66 30 132 H83 21 545 K12 375 5 Q58 90 18 S36 8 235 V97 140 20 Y88 17 744 Quantity and cost data from the last purchases invoice of the year and the next-to-the-last purchases invoice are summarized as follows: Description Last Purchases Invoice Next-to-the-Last Purchases Invoice Quantity Purchased Unit Cost Quantity Purchased Unit Cost A54 30 60 40 58 C77 25 174 15 180 F66 20 130 15 128 H83 6 547 15 540 K12 500 6 500 7 Q58 75 25 80 26 S36 5 256 4 260 V97 100 17 115 16 Y88 10 750 8 740 Instructions Determine the inventory at cost and also at the lower of cost or market, using the first-in, first-out method. Record the appropriate unit costs on the 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 as an example. Inventory Sheet December 31 Description Unit Inventory Quantity Cost per Unit Market Value per Unit(Net Realizable Value) Total Cost Market LCM A54 37 30 60 56 1,800 1,680 7 58 56 406 392 2,206 2,072 2,072
Perpetual inventory using LIFO Beginning inventory, purchases, and sales for Item 88-HX are as follows: July 1 Inventory 90 units at 54 8 Sale 75 units 15 Purchase 125 units at 60 27 Sale 80 units Assuming a perpetual inventory system and using the last-in, first-out (LIFO) method, determine (A) the cost of goods sold on July 27 and (B) the inventory on July 31.
Periodic inventory using FIFO, UFO, and weighted average cost methods The units of an item available for sale during the year were as follows: Jan. 1 Inventory 20 units at 360 7,200 Aug. 13 Purchase 260 units at 342 88,920 Nov. 30 Purchase 40 units at 357 14,280 Available for sale 320 units 110,400 There are 57 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost using the (A) first-in, first-out (FIFO) method; (B) last-in, first-out (LIFO) method; and (C) weighted average cost method.
ENDING INVENTORY COSTS Danny Steele owns a small specialty store, named Steeles Storeroom, whose year-end is June 30. Determine the total amount that should be included in Steeles Storerooms year-end inventory. A physical inventory taken on June 30 reveals the following: Cost of merchandise on the showroom floor and in the warehouse 42,600 Goods held on consignment (consignor is Quality Manufacturer) 7,600 Goods that Steeles Storeroom, as the consignor, has for sale at the location of Midtown Galleria 8,300 Sales invoices indicate that merchandise was shipped on June 28, terms FOB shipping point, delivered at buyers receiving dock on July 6 4,350 Sales invoices indicate that merchandise was shipped on June 26, terms FOB destination, delivered at buyers receiving dock on July 1 2,800
FIFO and UFO costs under perpetual inventory system The following units of an item were available for sale during the year: Beginning inventory 7,200 units at 160 Sale 4,800 units at 300 First purchase 16,000 units at 168 Sale 12,000 units at 300 Second purchase 15,000 units at176 Sale 11,000 units at 300 The firm uses the perpetual inventory system, and there are 10,400 units of the item on hand at the end of the year. What is the total cost of the ending inventory according to (A) FIFO and (B) UFO?
( Appendix 6B) Refer to the information for Morgan Inc. above. If Morgan uses a periodic inventory system, what is the cost of ending inventory under LIFO at April 30? a. $32,800 b. $38,400 c. $63,600 d. $69,200
LIFO perpetual inventory The beginning inventory for Dunne Co. and data on purchases and sales for a three-month period are shown in Problem 6-IB. Instructions 1. Record the inventory, purchases, and cost of goods sold data in a perpetual inventory record similar to the one illustrated in Exhibit 4, using the last-in, first-out method. 2. Determine the total sales, the total cost of goods sold, and the gross profit from sales for the period. 3. Determine the ending inventory cost on June 30.