Concept explainers
Real World Case 8–9
Effects of
• LO8–4, LO8–5, LO8–7
Real World Financials
EDGAR, the Electronic Data Gathering, Analysis, and Retrieval system, performs automated collection, validation, indexing, and forwarding of submission by companies and others who are required by law to file forms with the U.S. Securities and Exchange Commission (SEC). All publicly traded domestic companies use EDGAR to make the majority of their filings. (Some foreign companies file voluntarily.) Form 10-K, which includes the annual report, is required to be filed on EDGAR. The SEC makes this information available on the Internet.
Required:
1. Access EDGAR on the Internet. The web address is www.sec.gov.
2. Search for Whole Foods Market, Inc. Access the 10-K filing for the most recent fiscal year. Search or scroll to find the financial statements and related notes.
3. Answer the following questions related to the company’s inventories:
a. What method(s) does the company use to value its inventories?
b. Calculate what cost of sales would have been for the year if the company had used FIFO to value its inventories.
c. Calculate inventory turnover for the year using the reported numbers.
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Check out a sample textbook solutionChapter 8 Solutions
INT. ACCOUNTING<CUSTOM>W/CONNECT 2-YEA
- 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 2,072arrow_forwardInvestment reporting O'Brien Industries Inc. is a hook publisher. The comparative unclassified balance sheets for December 31, Year 2 and Year 1 follow. Selected missing balances are shown by letters. Brien Industries Inc. Balance Sheet December 31, Year 2 and Year 1 Dec. 31, Year 2 Dec 31, Year 1 cash 233,000 220,000 Accounts receivable (net) 136,530 138,000 Available for sale investments (at cost)Note 1 a 103,770 Less valuation allowance for available-for-sale investments b. 2,500 Available for-sale investments (fair value) c 101,270 Interest receivable d Investment in Jolly Roger Co. stockNote 2 e. 77,000 Office equipment (net) 115,000 130,000 Total assets f. 666,270 Accounts payable 69.400 65,000 Common stock 70.000 70,000 Excess of issue price over par 225,000 225,000 Retained earnings g 308,770 Unrealized gain (loss) on available for-sale investments h. (2,500) Total liabilities and Stockholders equity i. 666,270 Note 1. Investments are classified as available for sale. The investments at cost and fair value on December 31, Year 1, are as follows: No. of Shares Cost per Share Total Cost Total Fair Value Bernard Co. stock 2,250 17 38,250 37,500 Chadwick Co. stock 1,260 52 65,520 63,770 103,770 101,270 Note 2. The investment in Jolly Roger Co. stock is an equity method investment representing 30% of the outstanding .shares of Jolly Roger Co. The following selected investment transactions occurred during Year 2: May 5. Purchased 3,080 shares of Gozar Inc. at 30 per share including brokerage commission. Gozar Inc. is classified as an available-for-sale security. Oct. 1. Purchased 40,000 of Nightline co. 6%, 10-Year bonds at 100. The bonds are classified as available for sale. The bonds pay interest on October 1 and April 1. 9. Dividends of 12,500 are received on the Jolly Roger co. investment. Dec. 31 Jolly Roger co. reported a total net income of 112,000 for year 2. O'Brien industries Inc. recorded equity earnings for its share of Jolly Roger co. net income. 31. Accrued three months of interest on the Nightline bonds. 31. Adjusted the available-for-sale investment portfolio to fair value, using the following fair value per-share amounts: Available-for-Sale Investments Fair Value Bernard Co. stock 15,40 per share Chadwick Co. stock 46,00 per share Gozar Inc. stock 32,00 per share Nightline Co. bonds 98 per 100 of face amount Dec. 31. Closed the OBrien Industries Inc. net income of 146,230. O'Brien Industries Inc. paid no dividends during the year. Instructions Determine the missing letters in the unclassified balance sheet. Provide appropriate supporting calculations.arrow_forward
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