ACC 301 Exam 3

On October 20, 2005, Grimm Co. consigned 40 freezers to Holden Co. for sale at $1,000 each and paid $800 in transportation costs. On December 30, 2005, Holden reported the sale of 10 freezers and remitted $8,500. The remittance was net of the agreed 15% commission. What amount should Grimm recognize as consignment sales revenue for 2005?

$1,000(10) = $10,000 He sent 40 freezers to consignment & sold 10 freezers

Herc Co.'s inventory on December 31, 2005 was $1,500,000, based on a physical count priced at cost, and before any necessary adjustment for the following: • Merchandise costing $90,000, shipped FOB shipping point from a vendor on December 30, 2005, was received and recorded on January 5, 2006. • Goods in the shipping area were excluded from inventory although shipment was not made until January 4, 2006. The goods, billed to the customer FOB shipping point on December 30, 2005, had a cost of $120,000. What amount should Herc report as inventory in its December 31, 2005, balance sheet?

$1,500,000 + $90,000 + $120,000 = $1,710,000

The following information pertains to Grey Co. on December 31, 20X3: Checkbook balance $12,000 Bank statement balance $16,000 Check drawn on Grey's account, payable to a vendor, dated and recorded 12/31/X3 but not mailed until 1/10/X4 $1,800 On Grey's December 31, 20X3 balance sheet, what amount should be reported as cash?

$12,000+$1,800 = $13,800

Windsor Corporation's April 30 inventory was destroyed by fire. January 1 inventory was $154,200, and purchases for January through April totaled $525,400. Sales revenue for the same period was $687,900. Windsor's normal gross profit percentage is 30% on sales. Using the gross profit method, estimate Windsor's April 30 inventory that was destroyed by fire. Estimated ending inventory destroyed in fire

$154,200+$525,400 = $679,600 $687,900(0.30) = $206,370 $687,900-$206,370 = $481,530 $679,600-$481,530 = $198,070

Concord Company took a physical inventory on December 31 and determined that goods costing $189,300 were on hand. Not included in the physical count were $25,350 of goods purchased from Pelzer Corporation, f.o.b. shipping point, and $22,470 of goods sold to Alvarez Company for $27,670, f.o.b. destination. Both the Pelzer purchase and the Alvarez sale were in transit at year-end. What amount should Concord report as its December 31 inventory?

$189,300 $25,350 $22,470 = $237,120

Loft Co. reviewed its LIFO inventory values for proper pricing at year-end. The following summarizes two inventory items examined for the lower of cost or market: What amount should Loft include in inventory at year-end, if it uses the total of the inventory to apply the lower of cost or market?

$210,000+$400,000 = $610,000

Sarasota, Inc. had net sales in 2020 of $1,475,600. At December 31, 2020, before adjusting entries, the balances in selected accounts were Accounts Receivable $388,100 debit, and Allowance for Doubtful Accounts $2,580 credit. Assume Sarasota prepares an aging schedule that estimates total uncollectible accounts at $27,900. Prepare the entry to record bad debt expense.

$27,900-$2,580 = $25,320 Dec. 31, 2020: DR Bad Debt Expense $25,320 CR Allowance for Doubtful Accounts $25,320

The following information applied to Fenn, Inc. for 2005: Merchandise purchased for resale $400,000 Freight-in $10,000 Freight-out $5,000 Purchase returns $2,000 Fenn's 2005 inventoriable cost was

$400,000 ($2,000) $10,000 = $408,000

Data for a firm using the FIFO-LCM retail inventory method is as follows: Compute the cost of goods sold.

$467 $2,000 $100 ($300) ($1,700) = $567 ($300+$1,200)/($467+$2,000+$100 = $1,500/2,567 = 0.5843397 $567(0.5843397) = $331 $300+$1,200-$331 = $1,169

On December 31, 2020, Delar Co. completed its year-end physical count of inventory. The inventory was valued at first-in, first-out (FIFO) costs and totaled $500,000. Delar subsequently noted the following two items: 1. 1,000 units of inventory with a FIFO cost of $10 each were shipped and billed to a customer, f.o.b. destination on December 30, 2020. These items were included in the physical count. 2. 6,000 units at a FIFO cost of $5 each were held on consignment for one of its suppliers on December 31, 2020, but were excluded from the physical count. What amount should Delar report as inventory at year-end?

$500,000

The controller for Clint Stellar Co. is attempting to determine the amount of cash to be reported on its December 31, 2020, balance sheet. The following information is provided. 1. Commercial savings account of $665,200 and a commercial checking account balance of $804,700 are held at First National Bank of Yojimbo. 2. Money market fund account held at Volonte Co. (a mutual fund organization) permits Stellar to write checks on this balance, $5,165,400. 3. Travel advances of $188,400 for executive travel for the first quarter of next year (employee to reimburse through salary reduction). 4. A separate cash fund in the amount of $1,503,700 is restricted for the retirement of long-term debt. 5. Petty cash fund of $1,990. 6. An I.O.U. from Marianne Koch, a company customer, in the amount of $155,700. 7. A bank overdraft of $121,900 has occurred at one of the banks the company uses to deposit its cash receipts. At the present time, the company has no deposits at this bank. 8. The company has two certificates of deposit, each totaling $560,200. These CDs have a maturity of 120 days. 9. Stellar has received a check that is dated January 12, 2021, in the amount of $131,820. 10. Stellar has agreed to maintain a cash balance of $479,600 at all times at First National Bank of Yojimbo to ensure future credit availability. 11. Stellar has purchased $2,194,900 of commercial paper of Sergio Leone Co. which is due in 60 days. 12. Currency and coin on hand amounted to $7,602. (a) Compute the amount of cash and cash equivalents to be reported on Stellar Co.'s balance sheet at December 31, 2020. The amount of Cash and Cash Equivalents reported on December 31, 2020

$665,200 $804,700 $5,165,400 $1,990 $2,194,900 $7,602 = $8,839,792

Rue Co.'s allowance for uncollectible accounts had a credit balance of $12,000 at December 31, Year 1. During Year 2, Rue wrote off uncollectible accounts of $48,000. The aging of accounts receivable indicated that a $50,000 allowance for uncollectible accounts was required at December 31, Year 2. What amount of uncollectible accounts expense should Rue report for Year 2?

($12,000) $48,000 $50,000 = $86,000

Sarasota, Inc. had net sales in 2020 of $1,475,600. At December 31, 2020, before adjusting entries, the balances in selected accounts were Accounts Receivable $388,100 debit, and Allowance for Doubtful Accounts $1,928 debit. Assume that 11% of accounts receivable will prove to be uncollectible. Prepare the entry to record bad debt expense.

($388,100)(0.11)+$1,928 = $44,619 Dec. 31, 2020: DR Bad Debt Expense $44,619 CR Allowance for Doubtful Accounts $44,619

Sandhill Co. uses the gross method to record sales made on credit. On June 1, 2020, it made sales of $48,000 with terms 2/15, n/45. On June 12, 2020, Sandhill received full payment for the June 1 sale. Prepare the required journal entries for Sandhill Co.

($48,000)(0.02) = $960 June 1: DR A/R $48,000 CR Sales Revenue $48,000 June 12: DR Cash $47,040 DR Sales Discounts $960 CR A/R $48,000

Cullumber Co. uses the net method to account for cash discounts. On June 1, 2020, it made sales of $59,000 with terms 3/15, n/45. On June 12, 2020, Cullumber received full payment for the June 1 sale. Prepare the required journal entries for Cullumber Co.

($59,000)(0.97) = $57,230 June 1: DR A/R $57,230 CR Sales Revenue $57,230 June 12: DR Cash $57,230 CR A/R $57,230

On June 3, Sweet Company sold to Chester Company merchandise having a sale price of $3,800 with terms of 4/10, n/60, f.o.b. shipping point. An invoice totaling $91, terms n/30, was received by Chester on June 8 from John Booth Transport Service for the freight cost. On June 12, the company received a check for the balance due from Chester Company. (a) Prepare journal entries on the Sweet Company books to record all the events noted above under each of the following bases. (1)Sales and receivables are entered at the gross selling price. (2)Sales and receivables are entered at the net cash discounts. (b) Prepare the journal entry under basis 2, assuming that Chester Company did not remit payment until July 29.

(a) (1) June 3: DR A/R $3,800 CR Sales Revenue $3,800 June 12: DR Cash $3,648 DR Sales Discounts $152 CR A/R $3,800 (2) June 3: DR A/R $3,648 CR Sales Revenue $3,648 June 12: DR Cash $3,648 CR A/R $3,648 (b) July 29 DR Cash $3,800 CR Sales Discounts Forfeited $152 CR A/R $3,648

Metlock Company sold $8,170 of its specialty shelving to Elkins Office Supply Co. on account. Prepare the entries when (a) Metlock makes the sale. (b) Metlock grants an allowance of $717 when some of the shelving does not meet exact specifications but still could be sold by Elkins. (c) at year-end. Metlock estimates that an additional $219 in allowances will be granted to Elkins.

(a) DR A/R $8,170 CR Sales Revenue $8,170 (b) DR Sales Returns & Allowances $717 CR A/R $717 (c) DR Sales Returns & Allowances $219 CR Allowance for Sales Returns & Allowances $219

At the end of 2020, Crane Company has accounts receivable of $720,000 and an allowance for doubtful accounts of $36,000. On January 16, 2021, Crane Company determined that its receivable from Ramirez Company of $5,400 will not be collected, and management authorized its write-off. (a) Prepare the journal entry for Crane Company to write off the Ramirez receivable. (b) What is the net amount expected to be collected of Crane Company's accounts receivable before the write-off of the Ramirez receivable? (c)What is the net amount expected to be collected of Crane Company's accounts receivable after the write-off of the Ramirez receivable?

(a) Jan. 16, 2021: DR Allowance for Doubtful Accounts $5,400 CR A/R $5,400 (b) $720,000-$36,000 = $684,000 (c) ($720,000-$5,400)-($36,000-$5,400) = $684,000

Whispering Company's record of transactions for the month of April was as follows. Assuming that perpetual inventory records are kept in dollars, determine the inventory using (1) FIFO and (2) LIFO.

1,050 units FIFO: 750($6.79) = $5,092.50 300($6.60) = $1,980 $5,092.50+$1,980 = $7,072.50 LIFO: 750($6.79) = $5,092.50 150($6) = $900 150($6.08) = $912 $5,092.50+$900+$912 = $6,904.50

Blue Family Importers sold goods to Tung Decorators for $35,400 on November 1, 2020, accepting Tung's $35,400, 6-month, 6% note. Prepare Blue's November 1 entry, December 31 annual adjusting entry, and May 1 entry for the collection of the note and interest.

11/1/20 DR Notes Receivable $35,400 CR Sales Revenue $35,400 12/31/20 ($35,400)(2/12)(0.06) = $354 DR Interest Receivable $354 CR Interest Revenue $354 5/1/21 ($177 interest per month)(4 months) = $708 DR Cash $36,462 CR Interest Revenue $708 CR Interest Receivable $354 CR Notes Receivable $35,400

Marsh Company had 150 units of product A on hand on January 1, year 2, costing $21 each. Purchases of product A during the month of January were as follows: Units---Unit cost Jan. 10---200---$22 Jan. 18---250---$23 Jan. 28---100---$24 A physical count on January 31, year 2, shows 250 units of product A on hand. The cost of the inventory at January 31, year 2, under the LIFO method, is

150($21) = $3,150 100($22) = $2,200 = $5,350 LIFO 100($22) 250($24) 200($23)

Presented below is information related to Crane Company. Date---End. Inventory---Price Index 2017---$72,600---100 2018---$122,100---110 2019---$119,952---126 2020---$135,630---137 2021---$160,230---147 2022---$190,608---152

2017: = $72,600 2018: $122,100/1.10 = $111,000 $111,000-$72,600 = $38,400 $38,400(1.10) = $42,240 $42,240+$72,600 = $114,840 2019: $119,952/1.26 = $95,200 $95,200-$72,600 = $22,600 $22,600(1.10) = $24,860 $24,860+$72,600 = $97,460 2020: $135,630/1.37 = $99,000 $99,000-$72,600 = $26,400 $26,400-$22,600 = $3,800 $3,800(1.37) = $5,206 $22,600(1.10) = $24,860 $24,860+$5,206+$72,600 = $102,666 2021: $160,230/1.47 = $109,000 $109,000-$72,600 = $36,400 $36,400-26,400 = $10,000 $10,000(1.47) = $14,700 $24,860+$5,206+$14,700+$72,600 ($102,666+$14,700) = $117,366 2022: $190,608/1.52 = $125,400 $125,400-$72,600 = $52,800 $52,800-$36,400 = $16,400 $16,400(1.52) = $24,928 $10,000(1.47) = $14,700 $3,800(1.37) = $5,206 $22,600(1.10) = $24,860 $24,860+$5,206+$14,700+$24,928+$72,600 ($117,366+$24,928) = $142,294

Concord, Inc. uses the dollar-value LIFO method of computing its inventory. Data for the past 3 years following. Inventory Current---Price Index 2019---$18,000---100 2020---$20,383---109 2021---$24,168---114 Compute the value of the 2020 and 2021 inventories using the dollar-value LIFO method.

2020: $20,383/1.09 = $18,700 $18,700-$18,000 = $700 $700(1.09) = $763 $18,000+$763 = $18,763 2021: $24,168/1.14 = $21,200 $21,200-$18,700 = $2,500 $2,500(1.14) = $2,850 $18,763+$2,850 = $21,613

Marigold Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis. From the information above, determine the amount of Marigold Company inventory. The amount of Marigold Company's inventory

= $29,921

Presented below is information related to Whispering Inc.'s inventory, assuming Whispering uses lower-of-LIFO cost-or-market. A) The two limits to market value (i.e., the ceiling and the floor) that should be used in the lower-of-cost-or-market computation for skis. B) The amount that should be used in the lower-of-cost-or-market comparison of boots. C) The amount that should be used to value parkas on the basis of the lower-of-cost-or-market.

A) Skis Ceiling Limit: $258.64 ($23.18) = $235.46 Floor Limit: $235.46 ($39.04) = $196.42 B) Boots Ceiling Limit: $176.90 ($9.76) = $167.14 Floor Limit: $167.14 ($35.38) = $131.38 LCM: $129.32 C) Parkas Ceiling Limit: $89.98 ($3.05) = $86.93 Floor Limit: $86.93 ($25.93) = $61 LCM: $62.22

In its 2018 annual report, Gap Inc. reported inventory of $1,997 million on January 31, 2018, and $1,830 million on February 1, 2017, cost of goods sold of $9,789 million for 2018, and net sales of $15,855 million. A) Compute Gap's inventory turnover for the fiscal year 2018. B) Compute Gap's average days to sell inventory for the fiscal year 2018.

A) Inventory Turnover = COGS/ Average Inventory COGS: $9,789,000 Average Inventory: ($1,830,000+$1,997,000)/2 = $1,913,500 = $9,789,000/$1,913,500 = 5.1157 B) 365/ Inventory Turnover = 365/ 5.1157 = 71.289

Foster Co. adjusted its allowance for uncollectible accounts at year-end. The general ledger balances for the accounts receivable and the related allowance account were $1,000,000 and $40,000, respectively. Foster uses the percentage-of-receivables method to estimate its allowance for uncollectible accounts. Accounts receivable were estimated to be 5% uncollectible. What amount should Foster record as an adjustment to its allowance for uncollectible accounts at year-end?

A/R $1,000,000 Allowance $40,000 ($1,000,000)(0.05) = $50,000 $50,000-$40,000 = $10,000 increase

Jel Co., a consignee, paid the freight costs for goods shipped from Dale Co., a consignor. These freight costs are to be deducted from Jel's payment to Dale when the consignment goods are sold. Until Jel sells the goods, the freight costs should be included in Jel's

Accounts Receivable

The following information relates to Jay Co.'s accounts receivable for 2004: Accounts receivable, 1/1/04 $650,000 Credit sales for 2004 $2,700,000 Sales returns for 2004 $75,000 Accounts written off during 2004 $40,000 Collections from customers during 2004 $2,150,000 Estimated future sales returns at 12/31/04 $50,000 Estimated uncollectible accounts at 12/31/04 $110,000 What amount should Jay report for accounts receivable, before allowances for sales returns and uncollectible accounts, on December 31, 2004?

Accounts receivable, 1/1/04 $650,000 Credit sales for 2004 $2,700,000 Sales returns for 2004 ($75,000) Accounts written off during 2004 ($40,000) Collections from customers during 2004 ($2,150,000) = $1,085,000

Costs incurred to advertise goods held for resale.

Advertising Expense Income Statement

Whispering Company's record of transactions for the month of April was as follows. Assuming that periodic inventory records are kept in units only, calculate the average cost per unit.

Average Cost per unit: COGS/Goods Available COGS = $50,482.50 Units = 7,950 $50,482.50/7,950 = $6.35

Goods sold f.o.b. shipping point that are in transit at December 31.

COGS Income Statement

Goods sold on an installment basis (bad debts can be reasonably estimated).

COGS Income Statement

Goods sold where large returns are predictable.

COGS Income Statement

Whispering Company's record of transactions for the month of April was as follows. Compute cost of goods sold assuming periodic inventory procedures and inventory priced at FIFO.

COGS: COGS FIFO = COGS - End. Inventory $50,483 - $7,073 = $43,410

Generally, which inventory costing method approximates most closely the current cost for each of the following?

COGS: LIFO Ending Inventory: FIFO

The following are held by Smite Co.: Cash in checking account $20,000 Cash in bond sinking fund account $30,000 Postdated check from customer dated one month from balance sheet date $250 Petty cash $200 Commercial paper (matures in two months) $7,000 Certificate of deposit (matures in six months) $5,000 What amount should be reported as cash and cash equivalents on Smite's balance sheet?

Cash in checking account $20,000 Petty cash $200 Commercial paper (matures in two months) $7,000 = $27,200

Jones Wholesalers stocks a changing variety of products. Which inventory costing method will be most likely to give Jones the lowest ending inventory when its product lines are subject to specific price increases?

Dollar-value LIFO

Whispering Company uses a periodic inventory system. For April, when the company sold 500 units, the following information is available. Units Unit Cost Total Cost April 1---320---$21---$6,720 April 15---400---$25---$10,000 April 23---280---$27---$7,560 TOTAL---1,000---$24,280 Compute the April 30 inventory and the April cost of goods sold using the FIFO method.

FIFO Periodic Ending Inventory: 1,000-500 = 500 units 220($25) = $5,500 280($27) = $7,560 = $13,060 COGS: $24,280-$13,060 = $11,220

Inventory information for Part 311 of Nash Corp. discloses the following information for the month of June. June 1 BALANCE 304 units @$11 June 10 SOLD 201 units @$25 June 11 PURCHASED 796 units @$13 June 15 SOLD 499 units @$26 June 20 PURCHASED 501 units @$14 June 27 SOLD 296 units @$28 Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the gross profit if the inventory is valued at FIFO?

FIFO Perpetual: 201($25) = $5,025 499($26) = $12,974 296($28) = $8,288 Revenue = $26,287 COGS (FIFO) = $12,340 Gross Profit = Revenue - COGS Gross Profit: $13,947

Whispering Company's record of transactions for the month of April was as follows. In an inflationary period, which inventory method—FIFO, LIFO, average-cost—will show the highest net income?

FIFO inventory method will show the highest net income.

During periods of inflation, a perpetual inventory system would result in the same dollar amount of ending inventory as a periodic inventory system under which of the following inventory valuation methods?

FIFO: Yes LIFO: No

Oriole, Inc. buys 1,100 computer game CDs from a distributor who is discontinuing those games. The purchase price for the lot is $10,000. Oriole will group the CDs into three price categories for resale, as indicated below. Determine the cost per CD for each group, using the relative sales value method.

Group 1: $5 Group 2: $10 Group 3: $15

When the allowance method of recognizing bad debt expense is used, the entries at the time of collection of a small account previously written off would

Increase the allowance for doubtful accounts.

Leon Acrobats lent $48,868 to Donaldson, Inc., accepting Donaldson's 2-years, $57,000, zero-interest-bearing note. The implied interest rate is 8%. Prepare Leon's journal entries for the initial transaction, recognition of interest each year, and the collection of $57,000 at maturity.

Initial transactions: DR Notes Receivable $57,000 CR Discounts on Notes Receivable $8,132 CR Cash $48,868 Recognition of interest in year 1: ($48,868)(0.08) = $3,909 DR Discounts on Notes Receivable $3,909 CR Interest Revenue $3,909 Recognize the interest in year 2: ($48,868+$3,909)(0.08) = $4,222 DR Discounts on Notes Receivable $4,222 CR Interest Revenue $4,222 Collection of the note: DR Cash $57,000 CR Notes Receivable $57,000

Interest costs incurred for inventories that are routinely manufactured.

Interest Expense Income Statement

Freight charges on goods purchased.

Inventory Balance Sheet

Goods out on consignment at another company's store.

Inventory Balance Sheet

Goods purchased f.o.b. shipping point that are in transit at December 31.

Inventory Balance Sheet

Costs identified with units completed by a manufacturing firm but not yet sold.

Inventory Balance Sheet

Factory supplies.

Inventory Balance Sheet

Goods sold f.o.b. destination that are in transit at December 31.

Inventory Balance Sheet

Goods sold to another company, for which our company has signed an agreement to repurchase at a set price that covers all costs related to the inventory.

Inventory Balance Sheet

Materials on hand not yet placed into production by a manufacturing firm.

Inventory Balance Sheet

Raw materials on which a manufacturing firm has started production but which are not completely processed.

Inventory Balance Sheet

Swifty Company uses the LCNRV method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2020, consists of products D, E, F, G, H, and I. Relevant per unit data for these products appear below. Using the LCNRV rule, determine the proper unit value for balance sheet reporting purposes at December 31, 2020, for each of the inventory items above.

Item D: 125-31-10 = 84 = $78 Item E: 114-31-19 = 64 = $64 Item F: 99-26-10 = 63 = $63 Item G: 94-36-21 =37 = $37 Item H: 114-31-10 = 73 = $52 Item I: 94-31-21 = 42 = $37

Sheridan Company uses a periodic inventory system. For April, when the company sold 450 units, the following information is available. Units Unit Cost Total Cost April 1---280---$17---$4,760 April 15---420---$20---$8,400 April 23---300 $22---$6,600 TOTAL---1,000---$19,760 Compute the April 30 inventory and the April cost of goods sold using the LIFO method.

LIFO Periodic Ending Inventory: 1,000-450 = 550 units 280($17) = $4,760 270($20) = $5,400 = $10,160 COGS: $19,760-$10,160 = $9,600

Units---Units cost---Total cost---Units on hand 1/1---2,000---$1---2,000---2,000 1/8---1,200---$3---3,600---3,200 1/23---1,800---------1,400 1/28---800---$5---4,000---2,200 Nest uses the LIFO method to cost inventory. What amount should Nest report as inventory on January 31 under each of the following methods of recording inventory?

LIFO Perpetual: 1,400($1) = $1,400 800($5) = $4,000 2,200 units = $5,400 LIFO Periodic: 200($3) = $600 2,000($1) = $2,000 2,200 nuits = $2,600

Inventory information for Part 311 of Nash Corp. discloses the following information for the month of June. June 1 BALANCE 304 units @$11 June 10 SOLD 201 units @$25 June 11 PURCHASED 796 units @$13 June 15 SOLD 499 units @$26 June 20 PURCHASED 501 units @$14 June 27 SOLD 296 units @$28 Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the value of the ending inventory at LIFO?

LIFO Perpetual: = $7,864

When a company estimates its bad debt expense using the percent of net credit sales method, which of the following statements is true?

Matching is being followed.

Diego Corporation values its inventory at the lower of cost or net realizable value as required by IFRS. Diego has the following information regarding its inventory. Historical cost $100,000 Estimated selling price $98,000 Estimated costs to complete and sell $3,000 Replacement cost $90,000 What is the amount for inventory that Diego should report on the balance sheet under the lower of cost or net realizable value method?

NRV is not in between so we use selling price $98,000-$3,000 = $95,000

The following information was taken from Cody Co.'s accounting records for the year ended December 31, 2005: Decrease in raw materials inventory $15,000 Increase in finished goods inventory $35,000 Raw materials purchased $430,000 Direct labor payroll $200,000 Factory overhead $300,000 Freight-out $45,000 There was no work-in-process inventory at the beginning or end of the year. Cody's 2005 cost of goods sold is

No WIP Raw Materials: $430,000+$15,000 = $$445,000 Direct Labor: $200,000 Factory OH: $300,000 Finished Goods: ($35,000) 2005 COGS: $910,000

Goods held on consignment from another company.

Not Reported

Goods purchased f.o.b. destination that are in transit at December 31.

Not Reported

Office supplies.

Office Supplies Balance Sheet

The replacement cost of an inventory item is below the net realizable value and above the net realizable value less the normal profit margin. The original cost of the inventory item is below the net realizable value less the normal profit margin. Under the lower of cost or market method, the inventory item should be valued at

Original cost.

The weighted-average for the year inventory cost flow method is applicable to which of the following inventory systems?

Periodic: Yes Perpetual: No

Short-term investments in stocks and bonds that will be resold in the near future.

Short-term Investments Balance Sheet

On July 1, year 1, Link Development Company purchased a tract of land for $900,000. Additional costs of $150,000 were incurred in subdividing the land during July through December year 1. Of the tract acreage, 70% was subdivided into residential lots as shown below and 30% was conveyed to the city for roads and a park. Under the relative sales value method, the cost allocated to each Class A lot should be

TOTAL Sales Values from A, B, & C = $3,000,000 $900,000+$150,000 = $1,050,000 Class A: 100 lots $12,000(100) = $1,200,000 $1,200,000/$3,000,000 = 0.4 $1,050,000(0.4) = $420,000 $420,000/100 = $4,200 per Class A lots

Inventory information for Part 311 of Nash Corp. discloses the following information for the month of June. June 1 BALANCE 304 units @$11 June 10 SOLD 201 units @$25 June 11 PURCHASED 796 units @$13 June 15 SOLD 499 units @$26 June 20 PURCHASED 501 units @$14 June 27 SOLD 296 units @$28 Assuming that the periodic inventory method is used, compute the cost of goods sold and ending inventory under (1) LIFO and (2) FIFO.

Total Sold: 996 units Total Purchased: 1,601 units 1,601-996 = 605 units 304($11)+796($13)+501($14) = $20,706 LIFO Periodic COGS: 501($14) = $7,014 495($13) = $6,435 = $13,449 Ending Inventory: 304($11) = $3,344 301($13) = $3,913 = $7,257 FIFO Periodic COGS: 304($11) = $3,344 692($13) = $8,996 = $12,340 Ending Inventory: 104($13) = $1,352 501($14) = $7,014 = $8,366

Whispering Company's record of transactions for the month of April was as follows. Assuming that periodic inventory records are kept in units only, compute the inventory at April 30 using LIFO and average-cost.

Units: 7,950-6,900 = 1,050 units LIFO: 900(6) = $5,400 150(6.08) = $912 = $6,312 Average-Cost: 1,050($6.35) = $6,667.50

Kingbird Company uses a periodic inventory system. For April, when the company sold 600 units, the following information is available. Units---Unit Cost---Total Cost April 1---280---$31---$8,680 April 15---450---$37---$16,650 April 23---270---$40---$10,800 TOTAL---1,000---$36,130 Calculate weighted average cost per unit. Compute the April 30 inventory and the April cost of goods sold using the average-cost method.

Weighted average cost per unit $36,130/1,000 units = $36.13 Ending Inventory: 1,000-600 = 400 units 400($36.13) = $14,452 COGS: $36,130-$14,452 = $21,678