York Co. sells one product, which it purchases from various suppliers. York’s trial balance at December 31, 2021, included the following accounts: Sales (33,000 units @ $16) $ 528,000 Sales discounts 7,500 Purchases 380,600 Purchase discounts 18,000 Freight-in 5,000 Freight-out 11,000 York Co.’s inventory purchases during 2021 were as follows: Units Cost per Unit Total Cost Beginning inventory 7,000 $ 7.70 $ 53,900 Purchases, quarter ended March 31 13,000 7.50 97,500 Purchases, quarter ended June 30 15,000 7.90 118,500 Purchases, quarter ended September 30 12,000 8.25 99,000 Purchases, quarter ended December 31 8,000 8.20 65,600 55,000 $ 434,500 Additional Information: a. York’s accounting policy is to report inventory in its financial statements at the lower of cost or net realizable value, applied to total inventory. Cost is determined under the first-in, first-out (FIFO) method. b. York has determined that, at December 31, 2021, the net realizable value was $8.00 per unit. Required: 1a. Prepare York’s schedule of cost of goods sold. York includes inventory write-down losses in cost of goods sold. 1b. Prepare York’s schedule of ending inventory. 2. Determine whether inventory should be reported at cost or net realizable value.

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter18: Accounting Periods And Methods

Section: Chapter Questions

Problem 67P

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York Co. sells one product, which it purchases from various suppliers. York’s trial balance at December 31, 2021, included the following accounts:


Sales (33,000 units @ $16)	$	528,000
Sales discounts		7,500
Purchases		380,600
Purchase discounts		18,000
Freight-in		5,000
Freight-out		11,000

York Co.’s inventory purchases during 2021 were as follows:

	Units	Cost per Unit	Total Cost
Beginning inventory	7,000	$	7.70	$	53,900
Purchases, quarter ended March 31	13,000		7.50		97,500
Purchases, quarter ended June 30	15,000		7.90		118,500
Purchases, quarter ended September 30	12,000		8.25		99,000
Purchases, quarter ended December 31	8,000		8.20		65,600
	55,000			$	434,500

Additional Information:

a. York’s accounting policy is to report inventory in its financial statements at the lower of cost or net realizable value, applied to total inventory. Cost is determined under the first-in, first-out (FIFO) method.
b. York has determined that, at December 31, 2021, the net realizable value was $8.00 per unit.

Required:
1a. Prepare York’s schedule of cost of goods sold. York includes inventory write-down losses in cost of goods sold.
1b. Prepare York’s schedule of ending inventory.
2. Determine whether inventory should be reported at cost or net realizable value.

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