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Category > Accounting Posted 12 Jul 2017 My Price 10.00

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Question 1

In your audit of Tony Company, you find that a physical inventory on December 31, 2017, showed merchandise with a cost of $400,350 was on hand at that date. You also discover the following items were all excluded from the $400,350.

1.		Merchandise of $63,540 which is held by Tony on consignment. The consignor is the Max Suzuki Company.
2.		Merchandise costing $39,530 which was shipped by Tony f.o.b. destination to a customer on December 31, 2017. The customer was expected to receive the merchandise on January 6, 2018.
3.		Merchandise costing $43,150 which was shipped by Tony f.o.b. shipping point to a customer on December 29, 2017. The customer was scheduled to receive the merchandise on January 2, 2018.
4.		Merchandise costing $90,100 shipped by a vendor f.o.b. destination on December 30, 2017, and received by Tony on January 4, 2018.
5.		Merchandise costing $50,500 shipped by a vendor f.o.b. shipping point on December 31, 2017, and received by Tony on January 5, 2018.

Based on the above information, calculate the amount that should appear on Tony’s balance sheet at December 31, 2017, for inventory.

Inventory as on December 31, 2017

Tamarisk Company sells one product. Presented below is information for January for Tamarisk Company.

Jan. 1	Inventory	102	units at $5 each
4	Sale	81	units at $8 each
11	Purchase	158	units at $6 each
13	Sale	126	units at $9 each
20	Purchase	152	units at $6 each
27	Sale	98	units at $10 each

Tamarisk uses the FIFO cost flow assumption. All purchases and sales are on account.

Assume Tamarisk uses a periodic system. Prepare all necessary journal entries, including the end-of-month closing entry to record cost of goods sold. A physical count indicates that the ending inventory for January is 107 units. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit










Jan. 31

SHOW LIST OF ACCOUNTS

Larkspur Company was formed on December 1, 2016. The following information is available from Larkspur’s inventory records for Product BAP.

	Units	Unit Cost
January 1, 2017 (beginning inventory)	696	$ 6.00
Purchases:
January 5, 2017	1,392	7.00
January 25, 2017	1,508	8.00
February 16, 2017	928	9.00
March 26, 2017	696	10.00

A physical inventory on March 31, 2017, shows 1,856 units on hand.

Prepare schedule to compute the ending inventory at March 31, 2017, under FIFO inventory method.

Question 4

Pharoah Company uses the LCNRV method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2017, consists of products D, E, F, G, H, and I. Relevant per unit data for these products appear below.

	Item D	Item E	Item F	Item G	Item H	Item I
Estimated selling price	$125	$114	$99	$94	$114	$94
Cost	78	83	83	83	52	37
Cost to complete	31	31	26	36	31	31
Selling costs	10	19	10	21	10	21

Using the LCNRV rule, determine the proper unit value for balance sheet reporting purposes at December 31, 2017, for each of the inventory items above.

Item D			$
Item E			$
Item F			$
Item G			$
Item H			$
Item I			$

Question 5

Nash Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis.

Item No.	Quantity	Cost per Unit	Cost to Replace	Estimated Selling Price	Cost of Completion and Disposal	Normal Profit
1320	1,400	$3.30	$3.09	$4.64	$0.36	$1.29
1333	1,100	2.78	2.37	3.61	0.52	0.52
1426	1,000	4.64	3.81	5.15	0.41	1.03
1437	1,200	3.71	3.19	3.30	0.26	0.93
1510	900	2.32	2.06	3.35	0.82	0.62
1522	700	3.09	2.78	3.91	0.41	0.52
1573	3,200	1.85	1.65	2.58	0.77	0.52
1626	1,200	4.84	5.36	6.18	0.52	1.03

From the information above, determine the amount of Nash Company inventory.

The amount of Nash Company’s inventory

Question 6

You are called by Tim Duncan of Sunland Co. on July 16 and asked to prepare a claim for insurance as a result of a theft that took place the night before. You suggest that an inventory be taken immediately. The following data are available.

Inventory, July 1		$ 36,800
Purchases—goods placed in stock July 1–15		84,000
Sales revenue—goods delivered to customers (gross)		107,900
Sales returns—goods returned to stock		3,600

Your client reports that the goods on hand on July 16 cost $28,400, but you determine that this figure includes goods of $6,300 received on a consignment basis. Your past records show that sales are made at approximately 30% over cost. Duncan’s insurance covers only goods owned.

Compute the claim against the insurance company. (Round ratios for computational purposes to 2 decimal places, e.g. 78.73% and final answer to 0 decimal places, e.g. 28,987.)

Claim against the insurance company

Question 7

Indigo Lumber Company handles three principal lines of merchandise with these varying rates of gross profit on cost.

Lumber		25%
Millwork		30%
Hardware and fittings		40%

On August 18, a fire destroyed the office, lumber shed, and a considerable portion of the lumber stacked in the yard. To file a report of loss for insurance purposes, the company must know what the inventories were immediately preceding the fire. No detail or perpetual inventory records of any kind were maintained. The only pertinent information you are able to obtain are the following facts from the general ledger, which was kept in a fireproof vault and thus escaped destruction.

	Lumber	Millwork	Hardware
Inventory, Jan. 1, 2017	$245,200	$91,400	$45,400
Purchases to Aug. 18, 2017	1,501,400	379,400	160,600
Sales to Aug. 18, 2017	2,060,700	507,000	189,000

Submit your estimate of the inventory amounts immediately preceding the fire. (Round ratios for computational purposes to 5 decimal places, e.g. 78.74265% and final answers to 0 decimal places, e.g. 28,987.)

Lumber

Millwork

Hardware

Inventory

Question 8

The records of Wildhorse’s Boutique report the following data for the month of April.

Sales revenue	$103,300	Purchases (at cost)	$52,100
Sales returns	2,200	Purchases (at sales price)	95,200
Markups	9,000	Purchase returns (at cost)	2,200
Markup cancellations	1,600	Purchase returns (at sales price)	3,200
Markdowns	9,500	Beginning inventory (at cost)	29,725
Markdown cancellations	3,100	Beginning inventory (at sales price)	50,100
Freight on purchases	2,600

Compute the ending inventory by the conventional retail inventory method. (Round ratios for computational purposes to 0 decimal places, e.g. 78% and final answer to 0 decimal places, e.g. 28,987.)

Ending inventory using conventional retail inventory method

Question 9

Presented below is information related to Cheyenne Company.

	Cost	Retail
Beginning inventory	$ 54,010	$107,900
Purchases (net)	129,230	193,500
Net markups		10,281
Net markdowns		26,700
Sales revenue		174,520

Compute the ending inventory at retail.

Ending inventory

LINK TO TEXT

Compute a cost-to-retail percentage under the following conditions. (Round ratios to 2 decimal places, e.g. 78.74%)

		Cost-to-retail percentage
(1)	Excluding both markups and markdowns.		%
(2)	Excluding markups but including markdowns.		%
(3)	Excluding markdowns but including markups.		%
(4)	Including both markdowns and markups.		%

LINK TO TEXT

Which of the methods in (b) above does the following?

(1)		Provides the most conservative estimate of ending inventory.
(2)		Provides an approximation of lower-of-cost-or-market.
(3)		Is used in the conventional retail method.

LINK TO TEXT

Compute ending inventory at lower-of-cost-or-market. (Round ratio to 2 decimal places, e.g. 78.74% and final answer to 0 decimal places, e.g. 6,225.)

Ending inventory

LINK TO TEXT

Compute cost of goods sold based on (d). (Round answer to 0 decimal places, e.g. 6,225.)

Cost of goods sold

LINK TO TEXT

Compute gross margin based on (d). (Round answer to 0 decimal places, e.g. 6,225.)

Gross margin

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LARKSPUR COMPANY
COMPUTATION OF INVENTORY FOR PRODUCT
BAP UNDER FIFO INVENTORY METHOD
March 31, 2017

Unit Cost

Total Cost