Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 9, Problem 9.8BE
Retail inventory method; LIFO
• LO9–3
Refer to the situation described in BE 9–7. Estimate ending inventory and cost of goods sold (LIFO).
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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
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.
FE19Closing InventoryDec Type Qty Price1 Op Inv 65 $34.001 Purchase 79 $36.2511 Purchase 72 $36.5018 Purchase 60 $36.7522 Purchase 59 $37.003 Sale -84 $45.005 Sale -45 $46.0019 Sale -85 $48.0029 Sale -48 $49.0031 Sale -57 $50.00Required:a) Calculate closing inventory Qty and Value as per FIFO method b) Calculate closing inventory Qty and Value as per Weightage Average method
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
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- LO2 Under the perpetual system of accounting for inventory, the current merchandise inventory and the cost of goods sold are not determined until the end of the accounting period when a physical inventory is taken.arrow_forward( Appendix 6B) Refer to the information for Morgan Inc. above. If Morgan uses a periodic inventory system, what is the cost of goods sold under FIFO at April 30? a. $32,800 b. $38,400 c. $63,600 d. $69,200arrow_forward40- In Perpetual inventory system the loss of goods is included in a. Purchases b. Closing stock c. Sales d. Cost of goods soldarrow_forward
- Multiple Choice Questions If inventory was purchased for $2 288 inclusive of GST, what would the GST amount be? $22.88 $229.00 $208.00 $20.80arrow_forwardPARRISH Pg. 167 INVENTORY Please explain the following as to why the Purchase Allowance and Inventory accounts were credited. Periodic Inventory AP or Cash 10 Purchase Allowances 10 Perpetual Inventory AP or Cash 10 Inventory 10arrow_forward(i) Inventory = (60.83 – 54.75) ´ $32,876.7123 = $199,890.41. (ii) Receivables = (73 – 65.70) ´ $41,095.8904 = $300,000. (iii) Payables = (33.46 – 30.42) ´ $32,876.7123 = $99,945.21 How did you compute the $32,876.7123 for inventory, $41,095.8904 for receivables, and $32,876.7123 for payables?arrow_forward
- 1. How much is the ending inventory in terms of quantity? a. 621 c. 695 b. 471 d. 74 2. How much is the Cost of Goods Sold under weighted average method? a. 3,995 c. 37,525 b. 33,530 d. 3,959 3. How much is the ending inventory FIFO method? a. 33,680 c. 33,677 b. 33,050 d. 33,530arrow_forwardRequired: 15. If the FIFO cost flow method is used, the sale return shall be costed back into inventory at what unit cost?16. If the average cost flow method is used, the sale return shall be costed back into inventory at what unit cost?arrow_forward43. Using FIFO method, how much is the ending inventory?arrow_forward
- Required: 12. Compute for the closing inventory and cost of sales under the FIFO periodic method and the FIFO perpetual method. 13. Compute for the closing inventory and cost of sales under the weighted average periodic method and the moving average method. 14. Compute for the closing inventory and cost of sales under the LIFO periodic method and the LIFO perpetual method.arrow_forwardComparing Inventory Methods Obj. 5 Assume that a firm separately determined inventory under FIFO and LIFO and then compared the results. In each space that follows, place the correct sign [less than (<), greater than (>), or equal ] for each comparison, assuming periods of rising prices. 1. FIFO inventory ____________ LIFO inventory 2. FIFO cost of goods sold ____________ LIFO cost of goods sold 3. FIFO net income ____________ LIFO net income 4. FIFO income taxes ____________ LIFO income taxes Why would management prefer to use LIFO over FIFO in periods of rising prices?arrow_forwardE8.12 (LO 3) (FIFO, LIFO, Average-Cost Inventory) Shania Twain Company was formed onDecember 1, 2019. The following information is available from Twain’s inventory records for Product BAP. Units Unit CostJanuary 1, 2020 (beginning inventory) 600 $ 8.00Purchases:January 5, 2020 1,200 9.00January 25, 2020 1,300 10.00February 16, 2020 800 11.00March 26, 2020 600 12.00 A physical inventory on March 31, 2020, shows 1,600 units on hand.InstructionsPrepare schedules to compute the ending inventory at March 31, 2020, under each of the following inventory methods.a. FIFO b. LIFO. c. Weighted-average (round unit costs to two decimal places)arrow_forward
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