• (5 points) The following pertain to the cost of H’s only inventory item:
• (3 points) During June, the following changes in an inventory item took place:
• (9 points) Irene uses a calendar-year accounting period and a periodic inventory system. Assume Irene had the following independent situations:

• 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 (2,950 x $200 = $490,000)

 

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

• H uses perpetual LIFO
• H uses periodic LIFO
• H uses a weighted average method and rounds the unit cost to the nearest penny.

EI:

COGS:

Gross profit:

EI:

COGS:

Gross profit:

EI:

COGS:

Gross profit:

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?

• 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:

• Irene’s sales revenue for the year ended 12-31-11
• Irene’s cost of goods sold for the year ended 12-31-11
• Irene’s accounts receivable as of 12-31-11
• Irene’s inventory as of 12-31-11
• Irene’s accounts payable as of 12-31-11
• Irene’s stockholders’ equity as of 12-31-11

Situation #	I’s sales for year ended 12-31-11	I’s COGS for year ended 12-31-11	I’s AR as of 12-31-11	I’s inventory as of 12-31-11	I’s AP as of 12-31-11	I’s SE as of 12-31-11
1	Â	Â	Â	Â	Â	Â
2	Â	Â	Â	Â	Â	Â
3	Â	Â	Â	Â	Â	Â
4	Â	Â	Â	Â	Â	Â
5	Â	Â	Â	Â	Â	Â
6	Â	Â	Â	Â	Â	Â

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