1.
Gross Profit Method: Under this method, the beginning inventory is added to the net purchases during the period which results in the goods available for sale. Then, the estimated cost of goods sold is deducted from the goods available for sale to estimate the ending inventory.
Inventory turnover ratio: This is a financial metric that is used to quantify the number of times the inventory is used or sold during an accounting period.
To state: the inventory method that T Corporation uses to value its inventories.
2.
To state: the additional expenditures that the company includes in the initial cost of merchandise.
3.
To Calculate: the gross profit ratio and the inventory turnover ratio for the fiscal year ended January 30, 2016, and also compare the ratios.
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Intermediate Accounting, 10 Ed
- С23 Jx А B C. D E F G H. K I also need your assistance in claulating the following economic order quantity (Qe) given new data for 2017. Our inventory generally follows Pareto's Law; therefore, I have emphasized controlling those items representing the majority of our inventory activity. One of those items in IV (intravenous) setups. Our current situation is as follows: 2016 Price $50 for each IV setup 50,000 $25 2017 Demand 2017 Operating Cost 2017 Interest 6.25% 2017 Holding Cost $0.50 The IV distributor would like to distribute a new model setup in 2017 at the same price, but he tells us that he is willing to reduce our carrying costs by making monthly deliveries. After discussing this proposal with Ms. Care, I discovered that training will be required for the new setup. Ms. Care believes, and the distributor agrees, that each registered nurse (RN) will be required to attend a 2 hour seminar. I'm not sure where we put this training cost in the total cost formula. Ms. Care tells me…arrow_forwardChapter 8 Perform (ASAC LO 5 and BSAC LO 2) Kingbird Company began operations late in 2024 and adopted the conventional retail inventory method. Because there was no beginning inventory for 2024 and no markdowns during 2024, the ending inventory for 2024 was $13,708 under both the conventional retail method and the LIFO retail method. At the end of 2025, management wants to compare the results of applying the conventional and LIFO retail methods. There was no change in the price level during 2025. The following data are available for computations. Cost Inventory, January 1, 2025 Sales revenue Net markups mu Net markdowns mo Purchases Freight-in Estimated theft (b) The LIFO retail method. Ending inventory at cost Ending inventory at retail Cost $ $13,708 $ 63,900 5,888 Retail Compute the cost of the 2025 ending inventory under both: (a) The conventional retail method. $20,200 77,000 mu 9,900 mD 1,800 ex Beg Ending inventory using the conventional retail method $ 87,500 2,200 27336 40800…arrow_forwardProblem 8-13 (Algo) Dollar-value LIFO [LO8-8] On January 1, 2024, a company adopted the dollar-value LIFO method. The inventory value for its one inventory pool on this date was $390,000. Inventory data for 2024 through 2026 are as follows: Date 12/31/2024 12/31/2025 12/31/2026 Date Required: Calculate the company's ending inventory for 2024, 2025, and 2026, 01/01/2024 12/31/2024 12/31/2025 Ending Inventory at Year-End Costs $ 430,500 484,500 510,450 12/31/2026 Cost Index 1.05 1.14 1.23 Inventory Layers Converted to Base Year Cost Inventory Layers at Base Year Cost Inventory at Year-End Cost Year-End Cost Index M T a W Base Base 2024 Base 2024 2025 Base 2024 2025 2026 Inventory Layers Converted to Cost Year-End Cost Index Inventory Layers at Base Year Cost - M " . Inventory Layers Converted to Cost Inventory DVL Cost $ $ $ $ 0 0 0 0arrow_forward
- Q7 What amount will Music, Inc. report as ending inventory on its December 31, 2021 balance sheet?arrow_forwardUnder U.S. GAAP, LIFO is an acceptable inventory method. Financial statement information for three companies that use LIFO follows. All table numbers are in millions of dollars. Assume these companies adopted IFRS, and thus were required to use FIFO, rather than LIFO. a. Prepare a table with the following columns: (1) Difference between FIFO and LIFO inventory valuation. (2) Revised IFRS net income using FIFO. (3) Difference between FIFO and LIFO inventory valuation as a percent of total current assets. (4) Revised IFRS net income as a percent of the reported net income. b. Complete the table for the three companies. c. For which company would a change to IFRS for inventory valuation have the largest percentage impact on total current assets (Col. 3)? d. For which company would a change to IFRS for inventory valuation have the largest percentage impact on net income (Col. 4)? e. Why might Kroger have a negative impact on net income from using LIFO, while the other two companies have a positive impact on net income from using LIFO?arrow_forwardExercise 8-26 (Algo) Dollar-value LIFO [LO8-8] On January 1, 2024, a Company adopted the dollar-value LIFO method for its one inventory pool. The pool's value on this date was $670,000. The 2024 and 2025 ending inventory valued at year-end costs were $714,000 and $795,000, respectively. The appropriate cost indexes are 1.05 for 2024 and 1.06 for 2025. Required: Complete the below table to calculate the inventory value at the end of 2024 and 2025 using the dollar-value LIFO method. Note: Round "Year end cost index" to 2 decimal places. Round other final answer values to the nearest whole dollars. Date 01/01/2024 12/31/2024 12/31/2025 Inventory Layers Converted to Base Year Cost Inventory at Year-End Cost Year-End Cost Index = = = Inventory Layers at Base Year Cost Base Base 2024 Base 2024 2025 Inventory Layers Converted to Cost Inventory Layers at Base Year Cost Year-End Cost Index = = = = = Inventory Layers Converted to Cost Inventory DVL Cost S S S 0 0 0arrow_forward
- PROBLEM 15 Examination of the records of Hopper Company for the year ended December 31, 2021 revealed the following: • Inventory at January 1, 2021 was overstated by P71,000. • Inventory at December 31, 2021 was understated by P96,000. • During 2021, Hopper received a P60,000 cash advance from a customer for merchandise to be manufactured and shipped during 2022. The P60,000 was credited to sales revenue. • Profit (before adjustments) reported on the 2021 profit or loss was P658,000. Explain the right profit for 2021arrow_forward8–6 Various inventory costing methods; gross profit ratio ● LO8–1, LO8–4, LO8–7 Topanga Group began operations early in 2024. Inventory purchase information for the quarter ended March 31, 2024, for Topanga’s only product is provided below. The unit costs include the cost of freight. The company uses a periodic inventory system to report inventory and cost of goods sold. Date of Purchase Units Unit Cost Total Cost Jan. 7 5,000 $4.00 $20,000 Feb. 16 12,000 4.50 54,000 March 22 17,000 5.00 85,000 Total purchases 34,000 $159,000 Sales for the quarter, all at $7.00 per unit, totaled 20,000 units leaving 14,000 units on hand at the end of the quarter. Required: Calculate Topanga’s gross profit ratio for the first quarter using: FIFO LIFO Average cost Comment on the relative effect of each of the three inventory methods on the gross profit ratio.arrow_forwardE 8-5 Inventory transactions; missing data • LO8-1 A company has the following information in its records. Certain data have been intentionally omitted ($ in thousands). Beginning inventory Cost of goods sold 2024 2025 2026 $ 7 $ ? $225 Ending inventory སྐྱི་ 627 621 ? 225 216 Cost of goods available for 876 ? 800 sale Purchases (gross) 630 ? 585 Purchase discounts 18 15 ? Purchase returns 24 30 14 Freight-in 13 32 16 Required: Determine the missing numbers. Show computations where appropriate.arrow_forward
- QUESTION 1 Black Limited sells inventory to its parent, White Limited at cost price plus 125% mark-up. Closing inventories in the records of White Limited on 30 June 2022 amount to R157 500. Net realisable value of inventory on hand in the books of While limited amounts to R107 500 on 30 June 2022. • • • Ignore tax implications Required 1.3 1.1 Clearly illustrate how write-down of inventory will be with regard to the above information, showing inventory at selling price, value according to the group, net realisable value, write-down in White Limited's records, Unrealised profit from the group's perspective and additional elimination of unrealised profit required through pro forma consolidation journal. 1.2 Show how the journal entry would be recorded in the books of White Limited on 30 June 2022 in accordance with IAS 2. And also show pro forma consolidation journal for the group. Show how the pro forma journal entry/ies would be in the books of White Limited Group as of 30 June 2022,…arrow_forwardExercise 9-19 (Algo) Dollar-value LIFO retail [LO9-5] On January 1, 2024, the Brunswick Hat Company adopted the dollar-value LIFO retail method. The following data are available for 2024: Beginning inventory Net purchases Net markups Net markdowns Net sales Retail price index, 12/31/2024 Required: Calculate the estimated ending inventory and cost of goods sold for 2024 using the information provided. Note: Do not round intermediate calculations. Answer is complete but not entirely correct. Ending inventory at retail Ending inventory at cost Cost of goods sold Cost $ 82,600 119,500 $ $ $ 162,000 86,386 122,113 Retail $ 140,000 247,000 4,000 12,000 217,000 1.08arrow_forwardExercises L06-4 2924 5019 v2 gain This exercise stresses the relationships between the information recorded in a periodic inventory 1 EXERCISE 6.8 Relationships within Periodic Inventory Systems system and the basic elements of an income statement. Each of the five lines represents a separate set of information. You are to fill in the missing amounts. A net loss in the right-hand column is to be indicated by placing brackets around the amount, for example as in line e . 10 val2 Net Sales SAT u Isroish engewolley 10 as lodes bra naje od prols burdaud 15d bas dem oft moleivolal no obrint wo Ideas no sonsled osnoval 00442 5w 25an L06-5, L06-8 EXERCISE 6.9 Selecting an Inventory System instave promovni ofborne. H? niend nogal AbeBSTRUO. nisiqu Ending Inventory Phimb znotranca. Beginning Net Pur- Inventory chases UON DOS 2.210 95,200 264,000 to ? ? 35.200 104,000 76,000 a. 240,000 ai loreng salamat ainwalidw v10105 i taida! od 520) ? wif 72,000 272,000 b. 480,000 01040 Coloravitat 441,000…arrow_forward
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