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1.        (2 points) Shanlever Company’s physical inventory as of 12-31-16 showed merchandise with a cost of $570,000. Shanlever excluded the following items from the $570,000:

·         Merchandise costing $25,000 shipped by a vendor f.o.b. shipping point on 12-29-16 and received by Shanlever 01-04-17.

·         Merchandise costing $15,000 that Shanlever was holding on consignment for DeZoort Company.

·         Merchandise costing $42,000 shipped by Shanlever to a customer f.o.b. destination on 12-30-16 and received by the customer 01-10-17.

·         Merchandise costing $33,000 shipped by a vendor f.o.b. destination on 12-27-16 and received by Shanlever 01-05-17.

Based on the above information, calculate the amount of inventory that should appear on Shanlever’s balance sheet as of 12-31-16.

 

2.        (3 points) During June, the following changes in an inventory item took place:

                    June   1      Balance                                                     300 units @ $2

                              9      Purchased                                                 480 units @ $3

                            20      Purchased                                                 174 units @ $4

                            29      Purchased                                                 121 units @ $5

                              8      Sold                                                        195 units @ $10

                            10      Sold                                                        500 units @ $10

                            21      Sold                                                          80 units @ $10

                            26      Sold                                                          65 units @ $10

 

Assume the company maintains periodic inventory records. What is the cost of the ending inventory under the following methods?

(a)      FIFO

(b)     LIFO

(c)      Weighted-average (if necessary, round the unit cost to the nearest penny)

 

3.        (5 points) The following pertain to the cost of H’s only inventory item:

·         Inventory on hand, January 1                                                 0 units

·         Purchases, January 2                                                          900 units @ $95 per unit

·         Purchases, January 12                                                        750 units @ $96 per unit

·         Purchases, January 18                                                        400 units @ $98 per unit

·         Purchases, January 20                                                        300 units @ $100 per unit

·         Purchases, January 26                                                        600 units @ $99 per unit

2,950

·         Sales, January 5                                                                 400 units @ $200 per unit

·         Sales, January 11                                                               100 units @ $200 per unit

·         Sales, January 13                                                               600 units @ $200 per unit

·         Sales, January 17                                                               350 units @ $200 per unit

·         Sales, January 22                                                               450 units @ $200 per unit

·         Sales, January 25                                                               300 units @ $200 per unit

·         Sales, January 30                                                               250 units @ $200 per unit

2,450                                       (2,450 x $200 = $490,000)

 

Calculate COGS AND GP for January AND EI as of 01-31 under the following assumptions:

 

Ø  H uses perpetual LIFO

EI:                                                                          

COGS:                                                                   

Gross profit:                                                           

 

Ø  H uses periodic LIFO

EI:                                                                          

COGS:                                                                   

Gross profit:                                                           

 

Ø  H uses a weighted average method and rounds the unit cost to the nearest penny.

EI:                                                                          

COGS:                                                                   

Gross profit:                                                           

 

4.        (3 points) During June, the following changes in an inventory item took place:

                    June   1      Balance                                                   200 units @ $15

                              9      Purchased                                               350 units @ $16

                            25      Purchased                                               400 units @ $17

                            10      Sold                                                       200 units @ $40

                            21      Sold                                                        100 units @ $40

                            26      Sold                                                        350 units @ $40

Assume the company maintains perpetual inventory records.  What is the cost of the ending inventory under the following methods?

(a)      LIFO

(b)     Moving-average (if necessary, round the unit cost to the nearest penny)

 

5.                    (9 points) Irene uses a calendar-year accounting period and a periodic inventory system. Assume Irene had the following independent situations:

·         Situation 1. Goods shipped to Irene by a vendor f.o.b. destination on 12-28-11 were in transit at 12-31-11. The goods cost $12,000. On 12-28-11, Irene recorded a credit purchase of $12,000.

·         Situation 2.  Goods shipped to Irene by a vendor f.o.b. shipping point on 12-28-11 were in transit at 12-31-11. The goods cost $18,000. On 01-04-12, the day the goods arrived, Irene recorded a credit purchase of $18,000.

·         Situation 3.  Goods shipped to Irene by a vendor f.o.b. shipping point on 12-29-11 were in transit at 12-31-11. The goods cost  $25,000. On 12-30-11, Irene recorded a credit purchase of $25,000.

·         Situation 4.  On 12-31-11, Irene was in possession of $25,000 of goods that she was holding on a consignment basis.  Irene received these goods on 12-29-11. Upon receipt of these goods, Irene did not record any type of journal entry.

·         Situation 5.  Goods shipped by Irene to a customer f.o.b. destination on 12-30-11 were in transit at 12-31-11. The goods cost $15,000. On 12-30-11, Irene billed the customer and recorded a credit sale of $35,000.

·         Situation 6.  Goods shipped by Irene to a customer f.o.b. shipping point on 12-29-11 were in transit at 12-31-11. The goods cost $20,000. On 12-29-11, Irene billed the customer and recorded a credit sale of $45,000. The customer received the goods on 01-04-12.

 

Assume Irene values the inventory reported on its balance sheet and the amount recorded as cost of goods sold on its income statement on the basis of its physical inventory count that Irene performed on 12-31-11.  Irene counts whatever is on its premises.  Individually discuss the effect (in dollars and direction, e.g., overstate, understate, no effect) that each of the above items has on:

Ø  Irene’s sales revenue for the year ended 12-31-11

Ø  Irene’s cost of goods sold for the year ended 12-31-11

Ø  Irene’s accounts receivable as of 12-31-11

Ø  Irene’s inventory as of 12-31-11

Ø  Irene’s accounts payable as of 12-31-11

Ø  Irene’s stockholders’ equity as of 12-31-11

 

 

Remember, each box above should have BOTH an effect AND a $ amount.

 

6.        (5 points) Diane makes one product. Diana adopted the dollar-value LIFO inventory method on 12-31-12. Her ending inventory at 12-31-12 was $55,000. Additional inventory data follows:

                                                               Inventory at                                          Price index                  Cost of goods manufactured

                Year                                      year-end prices                                    (base year 2012)                            during the year

                2013                                           $56,280                                               1.005                                        $150,000

                2014                                           $54,540                                               1.010                                        $160,000

                2015                                           $57,798                                               1.014                                        $155,000

                2016                                           $58,986                                               1.017                                        $170,000

                2017                                           $55,917                                               1.026                                        $145,000

                2018                                           $57,680                                               1.030                                        $155,000

Compute the inventory at December 31, 2013, 2014, 2015, 2016, 2017 and 2018 AND the cost of goods sold for each year assuming Diane uses the dollar-value LIFO method for each year.

 

7.        (2.5 points)  Hartley’s accounting records included the following information:

Inventory, 01-01-13                                                                                                   $96,250

Purchases during 2013 (excluding shipping)                                                        $1,450,180

Purchase returns during 2013                                                                                    $57,500

Freight-in on 2013 purchases                                                                                     $33,075

Sales during 2013                                                                                                 $2,467,500

Hartley completed a physical inventory on 12-31-13 and calculated an ending inventory of $106,000, at cost. In recent years, Hartley's gross profit equaled 75% of Hartley’s cost. Hartley suspects some inventory may have been shoplifted. Prepare the entry, if necessary, to reflect the estimated loss from any shoplifted items.

 

8.        (2.5 points)  Gage’s accounting records included the following information:

Inventory, 01-01-15                                                                                                   $51,000

Purchases during 2015                                                                                             $705,000

Sales during 2015                                                                                                 $1,662,000

Sales returns during 2015                                                                                          $66,480

Gage completed a physical inventory on 12-31-15 and calculated an ending inventory of $80,000, at retail selling price. In recent years, Gage's gross profit equaled 55% of Gage’s selling price. Gage suspects some inventory may have been shoplifted. Prepare the entry, if necessary, to reflect the estimated loss from any shoplifted items.

 

9.        (2 points) As of 12-31-15, Zena Company has four different inventory items on hand. Data on the four items follows:

Using the lower-of-cost-or-net realizable value approach applied on an individual-item basis, determine if Zena needs to make an entry to write her inventory down. If so, prepare the entry Zena should make

 

10.     (2 points) As of 12-31-15, Acme Company has three different inventory items on hand. Data on the three items follows:

Using the lower-of-cost-or-market approach applied on an individual-item basis, determine if Acme needs to make an entry to write her inventory down. If so, prepare the entry Acme should make

 

11.     (3 points) Andre paid $1,200,000 to purchase 15,000 chairs. The 15,000 chairs consisted of 4 different chair types/styles: 3,500 rockers that Andre expects to sell for $125 each, 5,000 gliders that Andre expects to sell for $200 each, 2,000 straight-back chairs that Andre expects to sell for $100 each, and 4,500 recliners that Andre expects to sell for $150. Using the relative sales value method:

·         What is the cost of one individual rocker? Round your answer to the nearest penny.

·         What will be Andre’s gross profit amount if he sells 400 straight-back chairs? Round your answer to the nearest dollar.

·         If at the end of the accounting period, Andre has 3,000 recliners on hand, what will Andre report as his recliner ending inventory? Round your answer to the nearest dollar.

NOTE – when performing your calculations, make sure that you have allocated 100% of the $1,200,000 to the 4 different chair types. I suggest you use an excel spreadsheet (with formulas) to ensure you allocate the ENTIRE $1,200,000.