Chapter 7 study guide
Cost Flow Methods Three identical units of Item Alpha are purchased during February, as shown below. Item Alpha Units Cost Feb 9 purchase 1 $40 17 purchase 1 42 26 purchase 1 44 Total 3 42 (126/3 units) Assume that one unit is sold on February 28 for $75. Determine the gross profit for February and ending inventory on February 28 using the (a) first-in, first-out (FIFO); (b) last-in, first-out (LIFO); and (c) weighted average cos
Gross Profit Ending Inventory a. First-in, first-out (FIFO) 35 86 *units sold feb 28 -units sold feb 9(FIFO)= gross profit ending add remaining units left = inventory 75 - 40=35 42+44=86 b. Last-in, first-out (LIFO) 31 82 *units sold feb 28 - units sold feb 26(LIFO)= gross profit add remaining units left = inventory 75 -44=31 42 + 40=82 c. Weighted average cost 33 84 *total - unit sold feb 28= gross profit add all costs/ units & X 2= inventory 75 - 42= 33 126/3=42 42 X 2=84
Effect of Inventory Errors During the taking of its physical inventory on December 31, 2014, Sport Interiors Company incorrectly counted its inventory as $113,900 instead of the correct amount of $118,350. Indicate the effect of the misstatement on Sport Interiors' December 31, 2014, balance sheet and income statement for the year Merchandise inventory current assets total assets owners equity cost of merchandise sold gross profit net income
Merchandise inventory balance sheet current assets balance sheet total assets balance sheet owners equity balance sheet cost of merchandise sold income statement gross profit income statement net income income statement
Perpetual Inventory Using Weighted Average Beginning inventory, purchases, and sales for ZT901 are as follows: July 1 Inventory 100 units at $60 8 Sale 60 units 15 Purchase 120 units at $75 27 Sale 84 units a. Assuming a perpetual inventory system and using the weighted average method, determine the weighted average unit cost after the July 15 purchase. Round your answer to two decimal places. b. Assuming a perpetual inventory system and using the weighted average method, determine the cost of the merchandise sold on July 27. Round your "average unit cost" to two decimal places. c. Assuming a perpetual inventory system and using the weighted average method, determine the inventory on July 31. Round your "average unit cost" to two decimal places
a. $71.25 ** 100 units at $60 -60 units = 40 units at $60=2400 120 units at $75 =9000 160 11400 11400/160= $71.25 b. $5985.00 **$71.25 X (july 27 ) 84 units= $5985.00 C. $5415.00 **
Perpetual Inventory Using LIFO Beginning inventory, purchases, and sales for Item Echo are as follows: June 1 inventory 100 units at $50 4 sale 80 units 23 purchase 125 units at $60 26 sale 90 units Assuming a perpetual inventory system and using the last-in, first-out (LIFO) method, determine (a) the cost of merchandise sold on June 26 and (b) the inventory on June 30.
a. Cost of merchandise sold on June 26 $5400 *last sale X last purchase amt= cost of merchandise sold (June 26) 90 units X $60 purchase amt= $5400 b. Inventory on June 30
Perpetual Inventory Using FIFO Beginning inventory, purchases, and sales for Item Charlie are as follows: May 1 Inventory 45 units at $120 9 Sale 30 units 13 Purchase 60 units at $130 28 Sale 18 units Assuming a perpetual inventory system and using the first-in, first-out (FIFO) method, determine (a) the cost of merchandise sold on May 28 and (b) the inventory on May 31.
a. Cost of merchandise sold on May 28 $2190 *First inventory - First sale (FIFO) may 1 (45)- May 9 (30) units= 15units X $120 =$1800 may 28 (18) units - 15 units= 3 X $130=$390 390+ 1800= 2190 b. Inventory on May 31 $7410 *purchase - left inventory may 13(60)units - 3units= 57 units X $130= $7410
Inventory Turnover and Number of Days' Sales in Inventory The following financial statement data for years ending December 31 for Holland Company are shown below. 2014 2013 Cost of merch sold $1452500 $1120000 inventories beginning of year 380,000 320,000 end of year 450,000 380,000 a. Determine the inventory turnover for 2014 and 2013. Round to one decimal place. Inventory Turnover b. Determine the number of days' sales in inventory for 2014 and 2013. Assume 365 days a year. Round interim calculations and final answers to one decimal place.
a. Inventory Turnover 2014: 3.5 * (beginning of year + end of year)/2 cost of merch sold/inventory= inventory turnover 380,000+450,000=830000 830000/2 =415000 1452500/415000= 3.5 2013: 3.2 *320000+380000=700000 700000/2=350000 1120000/350000=3.2 b. Number of Days' Sales in Inventory 2014: 104.3 days 380,000+450000=830000 /2= 415000 1452500/365=3979 415000/3979= 104.29756 ( 104.3) 2013: 320000+380000=700000 / 2= 350000 1120000/365=3068 350000/3068=114.08083 (114.1) C. Favorable
Lower-of-Cost-or-Market Method On the basis of the data shown below: item Inventory Units cost Unit market Quantity price price 1107B 450 $80 $78 1110M 75 60 64 Determine the value of the inventory at the lower-of-cost-or-market. (Note: Apply lower-of-cost-or-market to each inventory item, as shown in Exhibit 9.)
answer: $39600 * lowest unit price X inventory quantity (both items) add two item prices item 1107B $78 X 450=35100 item 1110M $60 X 75= 4500 4500+35100= $39600
