Hawkeye Company began the current year with 1,000 units in ending inventory valued at $6.00 per unit. During the year, no inventory was purchased. The company sold for cash 920 units at $7.80 per unit. The replacement cost of the inventory was $6.80 per unit. At the beginning of the year, the general price level index was 100. At the end of the year, the general price level index was 110.
Required: Compute the ending inventory and any holding gains on the unsold units using:
1. historical cost/nominal dollars
2. current cost/nominal dollars
3. historical cost/current dollars
4. current cost/constant dollars

Question

Quizplus · Accepted Answer

The Answer of Hawkeye Company began the current year with 1,000 units in ending inventory valued at $6.00 per unit. During the year, no inventory was purchased. The company sold for cash 920 units at $7.80 per unit. The replacement cost of the inventory was $6.80 per unit. At the beginning of the year, the general price level index was 100. At the end of the year, the general price level index was 110.
Required: Compute the ending inventory and any holding gains on the unsold units using:
1. historical cost/nominal dollars
2. current cost/nominal dollars
3. historical cost/current dollars
4. current cost/constant dollars

Hawkeye Company Began the Current Year with 1,000 Units in Ending