Concept explainers
Various inventory costing methods
• LO8–1, LO8–4
Carlson Auto Dealers Inc. sells a handmade automobile as its only product. Each automobile is identical; however, they can be distinguished by their unique ID number. At the beginning of 2018, Carlson had three cars in inventory, as follows:
Car ID | Cost |
203 | $60,000 |
207 | 60,000 |
210 | 63,000 |
During 2018, each of the three autos sold for $90,000. Additional purchases (listed in chronological order) and sales for the year were as follows:
Car ID | Cost | Selling Price |
211 | $63,000 | $ 90,000 |
212 | 63,000 | 93,000 |
213 | 64,500 | not sold |
214 | 66,000 | 96,000 |
215 | 69,000 | 100,500 |
216 | 70,500 | not sold |
217 | 72,000 | 105,000 |
218 | 72,300 | 106,500 |
219 | 75,000 | not sold |
Required:
1. Calculate 2018 ending inventory and cost of goods sold assuming the company uses the specific identification inventory method.
2. Calculate ending inventory and cost of goods sold assuming FIFO and a periodic inventory system.
3. Calculate ending inventory and cost of goods sold assuming LIFO and a periodic inventory system.
4. Calculate ending inventory and cost of goods sold assuming the average cost method and a periodic inventory system.
Trending nowThis is a popular solution!
Chapter 8 Solutions
INTERMEDIATE ACCOUNTING(LL)-W/CONNECT
- Multiple Choice Question 100 Coronado Industries had the following inventory transactions occur during 2014: Units Cost/unit 2/1/16 Purchase 55 $45 06 68 3/14/16 Purchase $45 5/1/16 Purchase $47 The company sold 150 units at $60 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's after-tax income using FIFO? (rounded to whole dollars) $2114 $2240 $1404 $1568arrow_forwardProblem 6-5A Calculate ending inventory and cost of goods sold using FIFO and LIFO and adjust inventory using lower of cost and net realizable value (LO6-3, 6-6) [The following information applies to the questions displayed below.] For the current year, Parker Games has the following inventory transactions related to its traditional board games. Parker Games uses a periodic inventory system. Units Unit Cost Total Cost Transaction Beginning inventory 116 $19 $2,204 Date Jan. 1 Mar. 12 Sep. 17. 98 14 Purchase i Purchase 1,232 406 58 7 262 $3,842 Jan. 1-Dec. 31. Sales 168 Because of the increasing popularity of electronic video games, Parker Games continues to see a decline in the demand for board games. Sales prices have decreased by over 50% during the year. At the end of the year, Parker estimates the net realizable value of the 94 units of unsold inventory to be $480. Problem 6-5A Part 2 2. Using LIFO, calculate ending inventory and cost of goods sold. Ending inventory Cost of goods…arrow_forwardRequired information Problem 6-1A Calculate ending inventory and cost of goods sold for four inventory methods (LO6-3) (The following information applies to the questions displayed below.] Sandra's Purse Boutique has the following transactions related to its top-selling Gucci purse for the month of October. Sandra's Purse Boutique uses a periodic inventory system. Transactions Beginning inventory Sale Purchase Sale Purchase Sale Date October 1 October 4 Units Unit Cost 6. 4 Total Cost $ 4,560 $760 October 10 October 13 October 20 October 28 October 30 770 3,850 4 7 780 3,120 Purchase 790 6,320 $17,850 Problem 6-1A Part 2 2. Using FIFO, calculate ending inventory and cost of goods sold at October 31. Ending inventory Cost of goods soldarrow_forward
- b) Assessment #1 _Cost Classification Inventory valuation Question 2 RAZR WIRELESS sells a variety of mobile telephone accessories including several brands of Wireless Earbuds Bluetooth Headphones. The earbuds are sold in cases, with each case containing a pair of earbuds. RAZR began the last quarter (October to December) of 2021 with 30 cases of the (TOZO T6) earbuds at a total cost of $187,800. During the quarter the business completed the following transactions relating to the "TOZO T6" earbuds: c) October 8 October 31 November 4 November 10 November 30 December 4 December 10 98 cases were purchased at a cost of $6,202 each. In addition, the business paid a freight charge of $248 cash on each case to have the inventory shipped from the point of purchase to their place of business. December 30 December 31 The sales for October were 85 cases which yielded total sales revenue of $809,030. (25 of these cases were sold on account to three longstanding customers) A new batch of 67 cases…arrow_forwardc) d) Assessment #1 _Cost Classification Inventory valuation Question 2 RAZR WIRELESS sells a variety of mobile telephone accessories including several brands of Wireless Earbuds Bluetooth Headphones. The earbuds are sold in cases, with each case containing a pair of earbuds. RAZR began the last quarter (October to December) of 2021 with 30 cases of the (TOZO T6) earbuds at a total cost of $187,800. During the quarter the business completed the following transactions relating to the "TOZO T6" earbuds: October 8 October 31 November 4 November 10 November 30 December 4 December 10 98 cases were purchased at a cost of $6,202 each. In addition, the business paid a freight charge of $248 cash on each case to have the inventory shipped from the point of purchase to their place of business. December 30 December 31 The sales for October were 85 cases which yielded total sales revenue of $809,030. (25 of these cases were sold on account to three longstanding customers) A new batch of 67 cases…arrow_forwardRequired information Problem 6-1A Calculate ending inventory and cost of goods sold for four inventory methods (LO6-3) [The following information applies to the questions displayed below.] Sandra's Purse Boutique has the following transactions related to its top-selling Gucci purse for the month of October. Sandra's Purse Boutique uses a periodic inventory system. Unit Cost $ 700 Date Transactions Units Total Cost October 1 Beginning inventory Sale $ 4,200 6. October 4 October 10 4 Purchase 710 3,550 October 13 Sale October 20 Purchase 4. 720 2,880 October 28 Sale 7 October 30 Purchase 8 730 5,840 $16,470 Problem 6-1A Part 1 Required: 1. Calculate ending inventory and cost of goods sold at October 31, using the specific identification method. The October 4 sale consists of purses from beginning inventory, the October 13 sale consists of one purse from beginning inventory and two purses from the October 10 purchase, and the October 28 sale consists of three purses from the October 10…arrow_forward
- Problem #11 Transportation Costs On June 16, 2021, llano sold merchandise to Pascual for P6,000, terms 2/10, n/30. Shipping costs were P600. Pascual received the goods and llano's invoice on June 17. On June 24, Pascual sent the payment to llano, which llano received on June 25. Both lano and Pascual use the periodic inventory system. The following are several arrangements regarding the shipping costs: a. Shipping terms are F.O.B. shipping point, freight collect. Pascual paid the shipping costs on June 17 and remitted P5,880 on June 24. Required: 1. Prepare the entries for llano to record the sale and the cash receipt. 2. Prepare the entries for Pascual to record the purchase, the payment of shipping costs, and the cash remittance. b. Shipping terms are F.O.B. destination, freight prepaid. llano paid the shipping costs on June 16. Pascual remitted P5,880 on June 24. Required: 1. Prepare the entries for llano to record the sale, the payment of shipping costs, and the cash receipt. 2.…arrow_forwardExercise 6-2 (Algo) Inventory costs LO C1 Walberg Associates, antique dealers, purchased goods for $38,700. Terms of the purchase were FOB shipping point, and the cost of transporting the goods to Walberg Associates's warehouse was $1,800. Walberg Associates insured the shipment at a cost of $270. Prior to putting the goods up for sale, they cleaned and refurbished them at a cost of $610. Determine the cost of inventory. Cost of inventory Total cost of inventory $ 0arrow_forward4 eBook Print References Showtime Company's ending inventory at December 31, 2023, includes the following items: Units on Hand Net Realizable Value Per Unit 36 $ 116 15 50 54 Product 88 FM MB SL Unit Cost $111 146 187 79 Required: Calculate LCNRV for the inventory: a. As a whole (assuming the items are similar). LCNRV applied to inventory 139 173 93arrow_forward
- Brief Exercise 6-5 Calculate ending inventory and cost of goods sold using FIFO (LO6-3) During the year, Wright Company sells 415 remote-control airplanes for $100 each. The company has the following inventory purchase transactions for the year. Number of Unit Total Date Transaction Units Cost Cost $ 3,750 16,770 13,695 Jan. 1 Beginning inventory 50 $ 75 Purchase 215 78 Маy. Nov. 3 Purchase 165 83 430 $34,215 Calculate ending inventory and cost of goods sold for the year, assuming the company uses FIFO. FIFO Cost of Goods Available for Sale Cost of Goods Sold Ending Inventory Cost of Goods Cost of Goods Ending Inventory # of units Cost per unit # of units Cost per unit # of units Cost per unit Available for Sale Sold Beginning Inventory Purchases: May 5 Nov. 3 Totalarrow_forwardCurrent Attempt in Progress X Your answer is incorrect. The following information is available for Concord Company: Sales Revenue $390700 Freight-In $30400 Ending Purchase Returns and 37200 14200 Inventory Allowances Purchases 270300 Beginning Inventory 46000 Concord's cost of goods sold is O $284500. O $264900. O $295300. O $344700. Save for Later Attempts: 1 of 2 used Submit Answerarrow_forwardProblem 2 The Bertolo Corporation has eight items in inventory at December 31, 20x4. Cost data on each item of inventory is as follows: Required a) b) A101 A105 A109 B202 B203 B205 C101 C102 Z Cost $ 45,250 18,500 16,700 89,700 158,500 75,800 6,900 41,200 $452,550 SP Selling Price $ 54,300 22,200 20,900 125,600 166,500 98,500 7,900 50,600 $546,500 Cost to sell $ 2,800 5,550 2,100 6,300 25,000 19,700 2,000 4,500 $67,950 Calculate the cost of the inventory that would appear on the balance sheet as at December 31, 20x4. If a write-down of inventory is required, write the journal entry. At December 31, 20x5, Bertolo had $45,000 of item B203 on hand that was on hand at December 31, 20x4. The selling price and cost to sell of this inventory is $62,000 and $8,000 respectively. Write the journal entry at December 31, 20x5.arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education