Chapter 5, Problem 5.4P

Inventory transactions can be derived from a limited amount of data.The following schedule shows the amounts related to supplies that a city debited and credited to the indicated accounts during a year (not necessarily the year-end balances), excluding closing entries. The organization records its budget, encumbers all its expenditures, and initially vouchers all payments. Itaccounts for supplies on a consumption basis.   (in thousands) (In thousands )   Debits  Credits Cash  $0 $70 Inventory - 0 Vouchers payable  - - (appropriations) 0 115 Encumbrances - - Expenditures 57 0 Reserve for encumbrances 57 93 Unassigned fund balance  - 0 Nonspendable fund balance      (supplies inventory) 0 - Some information is missing. By reconstructing the entries that the organization made during the year, you are to determine the missing data. The city began the year with $5,000 of supplies in inventory and endedthe year with $6,000.

1. The home office bills its branch at 40% above cost. During the year 2020, goods costing 150,000 were shipped to the branch. The account “allowance for overvaluation of branch inventory”, after adjustment, shows a balance of P25,000 at the end of the year. Compute the amount of ending inventory at: a. Cost and b. Billed Price

Royal Gorge Company uses the gross profit method to estimate ending inventory and cost of goods sold when preparing monthly financial statements required by its bank. Inventory on hand at the end of October was $58,500. The following information for the month of November was available from company records: Purchases                                                                   $110,000Freight-in                                                                         3,000Sales                                                                             180,000Sales returns                                                                     5,000Purchases returns                                                             4,000 In addition, the controller is aware of $8,000 of inventory that was stolen during November from one of the company’s warehouses. Required:1. Calculate the estimated inventory at the end of November, assuming a gross profit ratio of 40%.2. Calculate the…

Wade Company estimates the cost of its physical inventory on March 31 for use in an interim financial statement. The rate of markup on cost is 25%. The following account balances are available:                 Inventory, March 1          $4,000,000                 Purchases during March                2,000,000                 Purchase returns              104,000                 Sales during March          3,400,000 The estimate of the cost of inventory on March 31 would be $2,496,000. $2,720,000. $3,176,000. $3,346,000.

Santorini Corporation has experienced a number of out of stock situations with respect to its finished goods inventories Inventory at the end of May, for example, was only 545 units an all time low Management desires to implement a policy whereby finished goods inventory is 60 % of the following month's sales Budgeted sales for June, and July are expected to be 3200 units, and 4400 units respectively Required Determine the number of units that Santorini must produce in June.

Munoz Company sells lamps and other lighting fixtures. The purchasing department manager prepared the following inventory purchases budget. Munoz’s policy is to maintain an ending inventory balance equal to 10 percent of the following month’s cost of goods sold. April’s budgeted cost of goods sold is $76,000. Required Complete the inventory purchases budget by filling in the missing amounts. Determine the amount of cost of goods sold the company will report on its first quarter pro forma income statement. Determine the amount of ending inventory the company will report on its pro forma balance sheet at the end of the first quarter.         Inventory Purchases Budget   January February March Budgeted cost of goods sold $60,000 $64,000 $70,000   6,400     Inventory needed 66,400       6,000     Required purchases (on account) $60,400     Determine the amount of cost of goods sold the company will report on its first quarter pro…

Inventory Estimation(MODIFIED) During 2020, Reliable Hardware Store had the following selected accounts and balances: Net Sales  Php 6,000,000 Net Purchases  4,100,000 Beginning Inventory  200,000 The physical count of inventory on hand at December 31, 2020 amounted to Php 240,000. Reliable had consistently followed its policy of having a 50% mark-up on cost.REQUIRED:1. Compute the inventory shrinkage.2. The owner of the business believes that the inventory shrinkage was due to shoplifting and intends to hire a security guard with a monthly salary of Php 10,000 to once and for all stop this practice. Is this a wise decision? Explain. Is there an alternative solution and when should this plan of action be adopted?

For numbers 10-12: Layla Company reported that a flood recently destroyed many of the financial records. The entity used an average cost of inventory valuation. The entity made a physical count at the end of each month in order to determine monthly ending inventory value. By examining various documents, the following data are gathered: Ending inventory at July 31 6,000 units Total cost of units available for sale in July 1,452,100 Cost of goods sold during July 1,164,100 Cost of beginning inventory, July 1 4.00 per unit Gross profit on sales for July 935,900 Units Unit cost Total cost July 5 55,000 5.10 280,500 11 53,000 5.00 265,000 15 45,000 5.50 247,500 16 47,000 5.30 249,100 Total purchases 200,000 1,042,100 10. What is the number of units on July 1? a. 102,500 c. 76,500 b. 140,000 d. 60,000 11. How many units were sold during the month of July? a. 140,000 c. 302,500 b. 242,500…