Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 9, Problem 9.14BE
Change in inventory costing methods
• LO9–6
In 2018, Wade Window and Glass changed its inventory method from FIFO to LIFO. Inventory at the end of 2017 is $150,000. Describe the steps Wade Window and Glass should take to report this change.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
1. What is the company’s gross profit rate beginning January 1, 2021?*
17%
20%
21%
24%
None of the choices
2. How much is the inventory fire loss?*
146,920
183,640
189,400
254,000
None of the choices
Exhibit7.5
Sullivan Produce Co. switched from FIFO to LIFO on January1,2018, for external reporting and income tax purposes, while retaining FIFO for internal reports. On that date, the FIFO inventory equaled $360,000. The ensuing three-year period resulted in the following:
December31,2018 Year-End Costs $438,000 Cost Index 1.05
December 31,2019 Year-End Costs $460,000 Cost Index 1.15
December 31, 2020 Year-End Costs $520,000 Cost Index 1.25
Refer to Exhibit 7-5, The ending inventory at December 31,2020, using the dollar-value LIFO method would be
a. $422,000
b. $402,000
c $426,000
d. $420,400
Refer to Exhibit7-5, the ending inventory at December 31,2019, at base-year price is:
a.$400,000
b. $402,000
c.$406,000
d.$424,000
E9.23
(LO 6 ) (Analysis of Inventories) The financial statements of ConAgra Foods, Inc.'s 2017 annual report disclose the following information.
(in millions)
2017
2016
2015
Year-end inventories
$934.2
$1,044.1
$1,642.6
Fiscal Year
2017
2016
Net sales
$7,826.9
$8,664.1
Cost of goods sold
5,484.8
6,234.9
Net income
648.0
(665.9)
Instructions
Compute ConAgra's (a) inventory turnover and (b) the average days to sell inventory for 2017 and 2016.
Chapter 9 Solutions
Intermediate Accounting
Ch. 9 - Explain the (a) lower of cost or net realizable...Ch. 9 - What are the various levels of aggregation to...Ch. 9 - Describe the alternative approaches for recording...Ch. 9 - Explain the gross profit method of estimating...Ch. 9 - The Rider Company uses the gross profit method to...Ch. 9 - Explain the retail inventory method of estimating...Ch. 9 - Both the gross profit method and the retail...Ch. 9 - Define each of the following retail terms: initial...Ch. 9 - Explain how to estimate the average cost of...Ch. 9 - Prob. 9.10Q
Ch. 9 - Explain the LIFO retail inventory method.Ch. 9 - Discuss the treatment of freight-in, net markups,...Ch. 9 - Explain the difference between the retail...Ch. 9 - Prob. 9.14QCh. 9 - Prob. 9.15QCh. 9 - Explain the accounting treatment of material...Ch. 9 - It is discovered in 2018 that ending inventory in...Ch. 9 - Identify any differences between U.S. GAAP and...Ch. 9 - (Based on Appendix 9) Define purchase commitments....Ch. 9 - (Based on Appendix 9) Explain how purchase...Ch. 9 - Lower of cost or net realizable value LO91 Ross...Ch. 9 - Lower of cost or net realizable value LO91 SLR...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Prob. 9.5BECh. 9 - Gross profit method; solving for unknown LO92...Ch. 9 - Retail inventory method; average cost LO93 Kiddie...Ch. 9 - Retail inventory method; LIFO LO93 Refer to the...Ch. 9 - Conventional retail method LO94 Refer to the...Ch. 9 - Conventional retail method LO94 Roberson...Ch. 9 - Dollar-value LIFO retail LO95 On January 1, 2018,...Ch. 9 - Dollar-value LIFO retail LO95 This exercise is a...Ch. 9 - Change i n inventory costing methods LO96 In...Ch. 9 - Change in inventory costing methods LO96 In 2018,...Ch. 9 - Inventory error LO97 In 2018, Winslow...Ch. 9 - Inventory error LO97 Refer to the situation...Ch. 9 - Lower of cost or net realizable value LO91 Herman...Ch. 9 - Lower of cost or net realizable value LO91 The...Ch. 9 - Lower of cost or net realizable value LO91 Tatum...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Prob. 9.8ECh. 9 - Prob. 9.9ECh. 9 - Prob. 9.10ECh. 9 - Gross profit method LO92 Royal Gorge Company uses...Ch. 9 - Prob. 9.12ECh. 9 - Retail inventory method; average cost LO93 San...Ch. 9 - Prob. 9.14ECh. 9 - Retail inventory method; LIFO LO93 Crosby Company...Ch. 9 - Prob. 9.16ECh. 9 - Conventional retail method; employee discounts ...Ch. 9 - Retail inventory method; solving for unknowns ...Ch. 9 - Dollar-value LIFO retail LO95 On January 1, 2018,...Ch. 9 - Prob. 9.20ECh. 9 - Dollar-value LIFO retail LO95 Lance-Hefner...Ch. 9 - Prob. 9.22ECh. 9 - Change in inventory costing methods LO96 In 2018,...Ch. 9 - Prob. 9.24ECh. 9 - Error correction; inventory error LO97 During...Ch. 9 - Prob. 9.26ECh. 9 - Inventory error LO97 In 2018, the internal...Ch. 9 - Inventory errors LO97 In 2018, the controller of...Ch. 9 - Concepts; terminology LO91 through LO97 Listed...Ch. 9 - Prob. 9.30ECh. 9 - Prob. 9.31ECh. 9 - Lower of cost or net realizable value LO91 Decker...Ch. 9 - Prob. 9.2PCh. 9 - Lower of cost or market LO91 Forester Company has...Ch. 9 - Prob. 9.4PCh. 9 - Prob. 9.5PCh. 9 - Prob. 9.6PCh. 9 - Retail inventory method; conventional and LIFO ...Ch. 9 - Prob. 9.8PCh. 9 - Prob. 9.9PCh. 9 - Dollar-value LIFO retail method LO95 [This is a...Ch. 9 - Dollar-value LIFO retail LO95 On January 1, 2018,...Ch. 9 - Retail inventory method; various applications ...Ch. 9 - Retail inventory method; various applications ...Ch. 9 - Prob. 9.14PCh. 9 - Inventory errors LO97 You have been hired as the...Ch. 9 - Inventory errors LO97 The December 31, 2018,...Ch. 9 - Integrating problem; Chapters 8 and 9; inventory...Ch. 9 - Purchase commitments Appendix In November 2018,...Ch. 9 - Judgment Case 91 Inventoriable costs; lower of...Ch. 9 - Integrating Case 93 FIFO and lower of cost or net...Ch. 9 - Prob. 9.4BYPCh. 9 - Prob. 9.5BYPCh. 9 - Prob. 9.6BYPCh. 9 - Prob. 9.7BYPCh. 9 - Real World Case 98 Various inventory issues;...Ch. 9 - Prob. 9.9BYPCh. 9 - Judgment Case 910 Inventory errors LO97 Some...Ch. 9 - Ethics Case 911 Overstatement of ending inventory ...Ch. 9 - Analysis Case 912 Purchase commitments Appendix...Ch. 9 - Continuing Cases Target Case LO93, LO94, LO95...Ch. 9 - Prob. 1CCIFRS
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- E9.3B (L0 1) (LCNRV) Sunshine Company follows the practice of pricing its inventory at LCNRV, on an individual-item basis. Item No. Quantity Cost per Unit Cost to Replace Estimated Selling Price Cost of Completion and Disposal Normal Profi t A 1,200 $8.10 $8.00 $9.00 $0.35 $0.90 B 600 6.00 5.60 6.00 0.45 0.50 C 200 5.50 5.00 7.00 0.40 1.00 D 700 7.25 7.50 8.00 0.50 0.90 E 1,000 2.10 2.00 2.80 0.65 0.20 F 500 4.05 4.00 5.00 0.40 0.75 G 2,000 8.75 8.15 9.00 0.60 0.50 H 300 9.95 9.00 10.50 0.30 1.00 Instructions From the information above, determine the amount of Sunshine Company inventory using the LCNRV method. determine the amount of Sunshine Company inventory using the LCM method.arrow_forwardEA5. EA5. LO 10.2Akira Company had the following transactions for the month.Chart showing Beginning Inventory of 150 units at $10 per unit, Purchase of March 31 of 160 units at $12 each, Purchase of October 15 of 130 units at $15 each, and ending inventory of 50 units at a cost of ? each.Calculate the ending inventory dollar value for the period for each of the following cost allocation methods, using periodic inventory updating. Provide your calculations. first-in, first-out (FIFO)last-in, first-out (LIFO)weighted average (AVG)arrow_forwardCA8.1 (LO 2) (Inventoriable Goods and Costs) You are asked to travel to Milwaukee to observe and verify the inventory of the Milwaukee branch of one of your clients. You arrive on Thursday, December 30, and find that the inventory procedures have just been started. You spot a railway car on the sidetrack at the unloading door and ask the warehouse superintendent, Buck Rogers, how he plans to inventory the contents of the car. He responds, “We are not going to include the contents in the inventory.” Later in the day, you ask the bookkeeper for the invoice on the carload and the related freight bill. The invoice lists the various items, prices, and extensions of the goods in the car. You note that the carload was shipped December 24 from Albuquerque, f.o.b. Albuquerque, and that the total invoice price of the goods in the car was $35,300. The freight bill called for a payment of $1,500. Terms were net 30 days. The bookkeeper affirms the fact that this invoice is to be held for recording…arrow_forward
- 8–6 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_forwardP6.11 (LO 6), AP Rayre Books uses the retail inventory method to estimate its monthly ending invento- ries. The following information is available for two of its departments at October 31, 2022. Hardcovers Paperbacks Cost Retail Cost Retail Beginning inventory $ 420,000 $ 640,000 $ 280,000 $ 360,000 Purchases 2,135,000 3,200,000 1,155,000 1,540,000 Freight-in 24,000 12,000 Purchase discounts 44,000 22,000 Net sales 3,100,000 1,570,000 At December 31, Rayre Books takes a physical inventory at retail. The actual retail values of the inven- tories in each department are Hardcovers $744,000 and Paperbacks $335,000. Instructions a. Determine the estimated cost ofthe ending inventory for each department at October 31, 2022, using the retail inventory method. b. Compute the ending inventory at cost for each department atDecember 31, assuming the cost-to- retail ratios for the year are 65% for Hardcovers and 75% for Paperbacks.arrow_forwardE18.17 (LO 3) (Sales with Returns) Refer to the revenue arrangement in E18.16. Assume that instead of selling the tool sets on credit, Steele sold them for cash. Below is the E18.16 On March 10, 2022, Steele Company sold to Barr Hardware 200 tool sets at a price of $50 each (cost $30 per set) with terms of n/60, f.o.b. shipping point. Steele allows Barr to return any unused tool sets within 60 days of purchase. Steele estimates that: (1) 10 sets will be returned, (2) the cost of recovering the products will be immaterial, and (3) the returned tools sets can be resold at a profit. On March 25, 2022, Barr returned six tool sets and received a credit to its account. Instructions 1. Prepare journal entries for Steele to record (1) the sale on March 10, 2022, (2) the return on March 25, 2022, and (3) any adjusting entries required on March 31, 2022 (when Steele prepares financial statements). Steele believes the original estimate of returns is correct.2. Indicate the income statement and…arrow_forward
- 3. Question: What is the cost of HIBISCUS Company's inventory at December 31, 2020, under the average method? a. ₱ 289,150 b. ₱ 281,250 c. ₱ 266,560 d. ₱ 291,060 At December 31, 2020, the following information was available from HIBISCUS Company's accounting records:arrow_forwardNOTE: Please do as Part A: Periodic direct method and Part B: Perpetual Allowance methods. the direction is not the same as text book. P9.3 (LO 1) (LCNRV–Cost-of-Goods-Sold and Loss) Malone Company determined its ending inventory at cost and at LCNRV at December 31, 2020, December 31, 2021, and December 31, 2022, as shown below. Cost NRV 12/31/20 $650,000 $650,000 12/31/21 780,000 712,000 12/31/22 905,000 830,000 Instructions a. Prepare the journal entries required at December 31, 2021, and at December 31, 2022, assuming that a perpetual inventory system and the cost-of-goods-sold method of adjusting to LCNRV is used. b. Prepare the journal entries required at December 31, 2021, and at December 31, 2022, assuming that a perpetual inventory is recorded at cost and reduced to LCNRV using the loss method.arrow_forward13 Mactan Company’s statements for 2018 and 2019 included the following errors: 12/31/18 inventory understated P2,000,000 12/31/19 inventory overstated 1,000,000 Depreciation for 2018 understated 400,000 Depreciation for 2019 overstated 800,000 How much should retained earnings be retroactively adjusted on January 1, 2020? Group of answer choices 1,400,000 decrease 600,000 increase 600,000 decrease 1,400,000 increasearrow_forward
- May I ask for an explanation and solution to the question for a better understanding. Thank you! 7. Pierce Corporation has the following gross profits for 2018 and 2019: Sales = 2019 - P810,000; 2018 - P792,000. Cost of sales = 2019 - 480,000; 2018 - 464,000. Gross profit = 2019 - P330,000; 2018 - P328,000. Sales price was 10% lower during 2019. The change in gross profit due to change in quantity sold must be: a. P42,710 U b. P44,710 F c. P63,290 U d. P108,000 Farrow_forwardPROBLEM 6: XXX Company is preparing its 2021 financial statements. Prior to any adjustments, inventory is valued at P1,605,000. The following information has been found relating to certaininventory transactions from your cut-off test: A. Goods valued at P110,000 are on consignment with a customer. These goods werenot included in the ending inventory figure. B.Goods costing P87,000 were received from a vendor on January 5, 2022. The relatedinvoice was received and recorded on January 12, 2022. The goods were shippedonDecember 31, 2021, terms FOB shipping point. C. Goods costing P85,000, sold for P102,000, were shipped on December 31, 2021, andwere delivered to the customer on January 2, 2022. The terms of the invoice wereFOBshipping point. The goods were included in the ending inventory for 2021 and thesalewas recorded in 2022. D. A P35,000 shipment of goods to a customer on December 31, terms FOB destinationwas not included in the year-end inventory. The goods cost P26,000…arrow_forwardMay I ask for an explanation and solution to the question for a better understanding. Thank you! 6. Pierce Corporation has the following gross profits for 2018 and 2019: Sales = 2019 - P810,000; 2018 - P792,000. Cost of sales = 2019 - 480,000; 2018 - 464,000. Gross profit = 2019 - P330,000; 2018 - P328,000. Sales price was 10% lower during 2019. The change in gross profit due to change in cost price must be: a. P39,680 F b. P47,290 F c. P47,290 U d. P63,290 F e. P63,290 Uarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
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:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
Accounting Changes and Error Analysis: Intermediate Accounting Chapter 22; Author: Finally Learn;https://www.youtube.com/watch?v=c2uQdN53MV4;License: Standard Youtube License