Homework - Speech or Presentation Example

HW#6 Start     31 Oct 2008 at 07:00 PM Due     7 Nov 2008 at 01:00 AM Access after Due    Yes. Mark Late Graded:    Yes E6-4Boarders sells a snowboard Xpert, that is popular with snowboard enthusiasts. Below is information relating to Boarders purchases of Xpert snowboards during September. During the same month, 121 Xpert snowboards were sold. Boarders uses a periodic inventory system. DateExplanationUnitsUnit CostTotal CostSept 1 Inventory26$  97$2,522Sept 12Purchases 45   102  4,590Sept 19Purchases 20   104  2,080Sept 26Purchases 50   105  5,250      Totals 141 $14,442Compute the ending inventory at September 30 and cost of goods sold using the FIFO and LIFO methods.

 FIFOLIFOEnding Inventory$$Cost of goods sold$$FIFO:Ending Inventory = 3,150Cost of goods sold = 11,292LIFO:Ending Inventory = 1,940Cost of goods sold = 12,502For both FIFO and LIFO, compute the sum of cost of goods sold and ending inventory. What do you notice about the result for each method. the sum is greater for FIFOthe sums for FIFO and LIFO are equalthe sum is greater for LIFOE6-5Catlet Co. uses a periodic inventory system. Its records show the following for the month of May in which 65 units were sold.

DateExplanationUnitsUnit CostTotal CostMay 1 Inventory 30   $ 8$240May 15Purchases 25    11  275May 24Purchases 35    12 420      Totals 90  $935Compute the ending inventory at May 31 and cost of goods sold using the FIFO and LIFO methods.  FIFOLIFOEnding Inventory$$Cost of goods sold$$FIFO:Ending Inventory = 180Cost of goods sold = 755LIFO:Ending Inventory = 120Cost of goods sold = 715E6-6Yount Company reports the following for the month of June: DateExplanationUnitsUnit CostTotal CostJune 1 Inventory200 $5 $1,000 June 12Purchases 300  6   1,800 June 23Purchases 500  7   3,500 June 30Inventory 120     Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO and (2) LIFO.

 FIFOLIFOEnding Inventory$$Cost of goods sold$$FIFO:Ending Inventory = 840Cost of goods sold = 5,460LIFO:Ending Inventory = 600Cost of goods sold = 5,700Which method gives the highest ending inventory? Ans. FIFOWhich method gives the highest cost of goods sold? Ans. LIFOE6-7Jones Company had 100 units in beginning inventory at a total cost of $10,000. The company purchased 200 units at a total cost of $26,000. At the end of the year, Jones had 80 units in ending inventory.Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO, (2) LIFO, and (3) average-cost.

 FIFOLIFOAverage-CostEnding Inventory$$$Cost of goods sold$$$FIFO:Ending Inventory = 10,400Cost of goods sold = 25,600LIFO:Ending Inventory = 8,000Cost of goods sold = 28,000Average - Cost:Ending Inventory = 9,600Cost of goods sold = 26,400Which cost flow method would result in the highest net income?Ans: FIFO Which cost flow method would result in inventories approximating current cost in the balance sheet? Ans: Average-costWhich cost flow method would result in Jones paying the least taxes in the first year?

Ans: LIFOE6-11Lebo Hardware reported the cost of goods sold as follows: 20082009Beginning Inventory$20,000$30,000Cost of goods purchased150,000175,000Cost of goods available for sale170,000205,000Ending inventory30,00035,000Cost of goods sold$140,000$170,000Lebo made two errors: (1) 2008 ending inventory was overstated by $3,000 and (2) 2009 ending inventory was understated $6,000. Instructions Compute the correct cost of goods sold for each year.  20082009Cost of goods sold$$Cost of goods Sold:2008: 137,0002009: 173,000P6-1AHeath Limited is trying to determine the value of its ending inventory at February 28, 2008, the company’s year end.

The accountant counted everything that was in the warehouse as of February 28, which resulted in an ending inventory valuation of $48,000. However, she didn’t know how to treat the following transactions so she didn’t record them. a. On February 26, Heath shipped to a customer goods costing $800. The goods were shipped FOB shipping point, and the receiving report indicates that the customer received the goods on March 2.b. On February 26, Seller Inc. shipped goods to Heath FOB destination.

The invoice price was $350. The receiving report indicates that the goods were received by Heath on March 2. c. Heath had $500 of inventory at a customer’s warehouse “on approval.” The customer was going to let Heath know whether it wanted the merchandise by the end of the week, March 4. d. Heath also had $400 of inventory on consignment at a Jasper craft shop. e. On February 26, Heath ordered goods costing $750. The goods were shipped FOB shipping point on February 27. Heath received the goods on March 1. f. On February 28, Heath packaged goods and had them ready for shipping to a customer FOB destination.

The invoice price was $350; the cost of the items was $250.The receiving report indicates that the goods were received by the customer on March 2. g. Heath had damaged goods set aside in the warehouse because they are no longer saleable. These goods originally cost $400 and, originally, Heath expected to sell these items for $600.Instructions For each of the above transactions, specify whether the item in question should be included in ending inventory, and if so, at what amount. If the item should not be included in ending inventory, put 0 for the amount. a. Not Included - 0b.

Not Included - 0c. Included - 500d. Included - 400e. Not Included - 0f. Not Included - 0g. Included - (-400) Included/Not Incuded               Amounta.$b.$c.$d.$e.$f.$g.$P6-2AGlanville Distribution markets CDs of the performing artist Harrilyn Clooney. At the beginning of March, Glanville had in beginning inventory 1,500 Clooney CDs with a unit cost of $7. During March Glanville made the following purchases of Clooney CDs.

March 53,000 @ $8 March 214,000 @ $10March 135,500 @ $9 March 262,000 @ $11During March 12,500 units were sold. Glanville uses a periodic inventory system.Determine the cost of goods available for sale. Ans: 32,000 (Assuming FIFO)$Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods. (Round answers to 0 decimal places.)  FIFOLIFOAverage CostEnding Inventory$$$Cost of Goods Sold$$$FIFO:Ending Inventory = 32,000Cost of goods sold = 114,000LIFO:Ending Inventory = 22,500Cost of goods sold = 123,500Average-Cost:Average cost = 9.

42Ending Inventory =28,258 Cost of goods sold = 117,750FIFO: Cost of Goods Sold + Ending Inventory = 114,000 + 32,000 = 146,000LIFO: Cost of Goods Sold + Ending Inventory = 123,500 + 22,500 = 146,000It is clear that he FIFO and LIFO values are accurate whereas Average cost values are not accurate (117,750 + 28,258 = 146,008).Which cost flow method results in (1) the highest inventory amount for the balance sheet and (2) the highest cost of goods sold for the income statement? 1. Highest Inventory Amount – FIFO2.

Highest cost of Goods Sold - LIFOHighest inventory amount  Highest cost of goods soldP6-5AYou are provided with the following information for Pavey Inc. for the month ended October 31, 2008. Pavey uses a periodic method for inventory. DateDescriptionUnitsUnit Cost orSelling PriceOctober 1Beginning inventory60 $25 October 9Purchase120 26 October 11Sale100 35 October 17Purchase70 27 October 22Sale60 40 October 25Purchase80 28 October 29Sale110 40 Instructions (a) Calculate (i) ending inventory, (ii) cost of goods sold, (iii) gross profit, and (iv) gross profit rate under each of the following methods.

(Round weighted-average cost per unit to 3 decimal places and use the rounded amount for future computations. Round gross profit rate to 1 decimal place and all other answers to 0 decimal places.)      (1) LIFO.       (2) FIFO.       (3) Average-cost. 1. LIFO:Ending Inventory = 1,500Cost of Goods Sold = 7,250Gross Profit = (10,300 – 7,250) = 3,050Gross Profit Rate = 29.6%2. FIFO:Ending Inventory = 1,680Cost of Goods Sold = 7,070Gross Profit = (10,300 – 7,070) = 3,230Gross Profit Rate = 31.4%3. Average-Cost:Ending Inventory = 1,625Cost of Goods Sold = 7,124Gross Profit = (10,300 – 7,124) = 3,176Gross Profit Rate = 30.

8% LIFOFIFOAverage CostEnding inventory$$$Cost of goods sold$$$Gross profit$$$Gross profit rate%%%(b) Compare results for the three cost flow assumptions. What cost flow results in the lowest inventory value. Ans: LIFOCopyright © 2000-2008 by John Wiley & Sons, Inc. or related companies. All rights reserved.