8th Edition

ISBN: 9781259767074

Author: SPICELAND

Publisher: MCG CUSTOM

Concept explainers

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in…

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Textbook Question

Chapter 9, Problem 9.26E

Concepts; terminology

• LO9–1 through LO9–7

Listed below are several terms and phrases associated with inventory measurement. Pair each item from List A with the item from List B (by letter) that is most appropriately associated with it.

List A	List B
__________ 1. Gross profit ratio	a. Reduction in selling price below the original selling price
__________ 2. Cost-to-retail percentage	b. Beginning inventory is not included in the calculation of the cost-to-retail percentage
__________ 3. Additional markup	c. Deducted in the retail column after the calculation of the cost-to-retail percentage
__________ 4. Markdown	d. Requires base year retail to be converted to layer year retail and then to cost
__________ 5. Net markup	e. Gross profit divided by net sales
__________ 6. Retail method, FIFO and LIFO	f. Material inventory error discovered in a subsequent year
__________ 7. Conventional retail method	g. Must be added to sales if sales are recorded net of discounts
__________ 8. Change from LIFO	h. Deducted in the retail column to arrive at goods available for sale at retail
__________ 9. Dollar-value LIFO retail	i. Divide cost of goods available for sale by goods available at retail
__________ 10. Normal spoilage	j. Average cost, lower of cost or market
__________ 11. Requires retrospective restatement	k. Added to the retail column to arrive at goods available for sale
__________ 12. Employee discounts	l. Increase in selling price subsequent to initial markup
__________ 13. Net markdowns	m. Selling price less estimated selling costs
__________ 14. Net realizable value	n. Accounting change requiring retrospective treatment

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Chapter 9, Problem 9.25E

Chapter 9, Problem 9.27E

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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.

H7. For the same transactions, why does the weighted-average cost method provide different value for ending inventory and COGS depending on whether the periodic or perpetual inventory system is used? Select one: a. Perpetual inventory calculates and assigns costs as items are sold, while periodic inventory calculates and assigns costs at the end of the period. b. Perpetual inventory calculates and assigns costs at the end of the period, while periodic inventory calculates and assigns costs as items are sold. c. Perpetual inventory counts all the purchases for the month first before calculating the average cost, while periodic calculates the average cost after every transaction. d. Perpetual inventory and periodic inventory will not provide different values using Explain also wrong options and explain with details

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Chapter 9 Solutions

INT. ACCOUNTING<CUSTOM>W/CONNECT 2-YEA

Ch. 9 - Prob. 9.1Q Ch. 9 - Prob. 9.2Q 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. 9.14Q Ch. 9 - Prob. 9.15Q Ch. 9 - Explain the accounting treatment of material...Ch. 9 - Prob. 9.17Q 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 - Prob. 9.3BE Ch. 9 - Gross profit method; solving for unknown LO92...Ch. 9 - Prob. 9.5BE Ch. 9 - Prob. 9.6BE Ch. 9 - Prob. 9.7BE Ch. 9 - Prob. 9.8BE Ch. 9 - Prob. 9.9BE Ch. 9 - Prob. 9.10BE Ch. 9 - Prob. 9.11BE Ch. 9 - Prob. 9.12BE Ch. 9 - Prob. 9.13BE Ch. 9 - Prob. 9.14BE Ch. 9 - Lower of cost or net realizable value LO91 Herman...Ch. 9 - Prob. 9.2E Ch. 9 - Prob. 9.3E Ch. 9 - Prob. 9.5E Ch. 9 - Prob. 9.6E Ch. 9 - Prob. 9.7E Ch. 9 - Gross profit method LO92 Royal Gorge Company uses...Ch. 9 - Prob. 9.9E Ch. 9 - Prob. 9.10E Ch. 9 - Prob. 9.11E Ch. 9 - Prob. 9.12E Ch. 9 - Prob. 9.13E Ch. 9 - Prob. 9.14E Ch. 9 - Prob. 9.15E Ch. 9 - Prob. 9.16E Ch. 9 - Prob. 9.17E Ch. 9 - Prob. 9.18E Ch. 9 - Prob. 9.19E Ch. 9 - Prob. 9.20E Ch. 9 - Prob. 9.21E Ch. 9 - Prob. 9.22E Ch. 9 - E9–23 Inventory errors • LO9–7 For each of the...Ch. 9 - Prob. 9.24E Ch. 9 - Prob. 9.25E Ch. 9 - Concepts; terminology LO91 through LO97 Listed...Ch. 9 - Prob. 9.27E Ch. 9 - Prob. 9.28E Ch. 9 - Prob. 1CPA Ch. 9 - Prob. 2CPA Ch. 9 - Prob. 3CPA Ch. 9 - Prob. 4CPA Ch. 9 - Prob. 5CPA Ch. 9 - Prob. 1CMA Ch. 9 - Prob. 2CMA Ch. 9 - Prob. 3CMA Ch. 9 - Prob. 9.1P Ch. 9 - Prob. 9.2P Ch. 9 - Prob. 9.3P Ch. 9 - Prob. 9.4P Ch. 9 - Prob. 9.5P Ch. 9 - Prob. 9.6P Ch. 9 - Prob. 9.7P Ch. 9 - Prob. 9.8P Ch. 9 - Prob. 9.9P Ch. 9 - Prob. 9.10P Ch. 9 - Prob. 9.11P Ch. 9 - P9–12 Charge in methods • LO9–6 Rockwell...Ch. 9 - Prob. 9.13P Ch. 9 - Prob. 9.14P Ch. 9 - Prob. 9.15P Ch. 9 - Prob. 9.16P Ch. 9 - Judgment Case 9–1 Inventoriable costs: lower of...Ch. 9 - Integrating Case 9–3 Unit LIFO and lower of cost...Ch. 9 - Prob. 9.4BYP Ch. 9 - Prob. 9.5BYP Ch. 9 - Prob. 9.6BYP Ch. 9 - Prob. 9.7BYP Ch. 9 - Prob. 9.8BYP Ch. 9 - Prob. 9.9BYP Ch. 9 - Judgment Case 910 Inventory errors LO97 Some...Ch. 9 - Prob. 9.11BYP Ch. 9 - Prob. 9.12BYP Ch. 9 - Prob. 1AFKC

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