Question 1

A company reports the following in its inventory records for June:
  
During June, the company sold 12 units. Using the weighted-average cost method, compute the cost of goods sold for June and the June 30 ending inventory balance for this product.

Accepted Answer

The answer of A company reports the following in its...

Question 2

Tisdell Fabricators, Inc., has 10 units in beginning inventory costing $15 each. It purchased 90 more for $12 each during the month. The company sold 80 units during the month.
Calculate cost of goods sold using:
a. FIFO
b. Weighted-average cost
c. LIFO

Accepted Answer

The answer of Tisdell Fabricators, Inc., has 10 units in...

Question 3

At the beginning of July, Pulman Luggage holds 15 units of its only product with a per-unit cost of $140. During July, Pulman sells 40 units. A summary of purchases during the current period follows:
 
 Assume that Pulman utilizes the LIFO method and instead of making the third purchase during July, the company allows its inventory level to decline by delaying the third purchase until August.
Required:
a. Compute cost of goods sold for July if the third purchase is made during July.
b. Compute cost of goods sold for July if the third purchase is delayed to August.
c. Discuss the effect on July profit if the company delays the third purchase until August.

Accepted Answer

The answer of At the beginning of July, Pulman Luggage...

Question 4

Crown Company imports and sells a product produced in Germany. In the summer of 2018, a natural disaster disrupted production, affecting its supply of product. Crown uses the LIFO inventory method. On January 1, 2019, Crown's inventory records were as follows:
 
 Through mid-December of 2019, purchases were limited to 50,000 units, because the cost had increased to $25 per unit. Crown sold 55,000 units during 2019 at a selling price of $50 per unit, which significantly depleted its inventory. The cost was expected to drop to $21 per unit by early January, 2020.
Required:
a. Assume that Crown makes no further purchases during 2019. Compute the gross profit for 2019.
b. Assume that Crown purchases 8,800 units before the end of December, 2019 at $25 each. Compute its gross profit for 2019.
c. If Crown's corporate tax rate is 30%, how much tax savings will result from the purchase of inventory before year end?

Accepted Answer

The answer of Crown Company imports and sells a product...

Question 5

Sawyer Company reported the following net income amounts: 2016, $82,000; 2017, $50,000; and 2018, $40,000. In 2019, the company discovered errors that had been made in computing the ending inventories for 2016 and 2017, as follows: 
  
Compute the correct net incomes for 2016, 2017, and 2018.

Accepted Answer

The answer of Sawyer Company reported the following net income...

Question 6

Lee Company reported the following net income amounts: Year 1, $70,000; Year 2, $58,000; and Year 3, $53,000. In Year 4, the company discovered errors that had been made in computing the ending inventories for Year 1 and Year 2, as follows: 
 
Compute the correct net incomes for Year 1, Year 2, and Year 3.

Accepted Answer

The answer of Lee Company reported the following net income...

Question 7

Best Buy Clothing had the following inventory at December 31, 2019:
  
Required:
a. Determine ending inventory by applying the lower of cost or net realizable value rule to:
1. Each item of inventory
2. Each major category of inventory
3. Total inventory
b. Which of the LCNRV procedures from requirement A results in the lowest net income for 2019? Explain.

Accepted Answer

The answer of Best Buy Clothing had the following inventory...

Question 8

As a shareholder of Benson Industries, a manufacturer of DVD players, you are interested in comparing gross profits over a 3-year period. Calculate the gross profit percentage for years 2019, 2018, and 2017 using the income statement items below (in thousands). Interpret your results.

Accepted Answer

The answer of As a shareholder of Benson Industries, a...

Question 9

Selected balance sheet and income statement information for Software Corporation and Entertainment Corporation for 2019 follows (in thousands):
  Required:
a. Compute the inventory turnover rate for Software Co. and Entertainment Co. for 2019.
b. Comment on the differences you observe between the turnover rates for these two companies.

Accepted Answer

The answer of Selected balance sheet and income statement information...

Question 10

The following are 2019 inventory data for Chavez Company, which uses a perpetual inventory system. 
  Ending inventory at December 31 is 50 units. Compute the cost of the ending inventory using the following methods:
a. First-in, first-out
b. Weighted-average
c. Last-in, first-out

Accepted Answer

The answer of The following are 2019 inventory data for...

Question 11

The following are 2019 inventory data for Thames Company, which uses a perpetual inventory system.
 
 Ending inventory at December 31 is 125 units. Compute the cost of the ending inventory using the following methods:
a. FIFO
b. Weighted-average
c. LIFO

Accepted Answer

The answer of The following are 2019 inventory data for...

Question 12

Farnsworth, Inc., reports the following information in its annual report:
 
 Sales for 2019 totaled $4,200,000. Cost of goods sold under LIFO totaled $1,850,000. Compute Farnsworth's cost of goods sold and gross profit assuming it uses the FIFO method.

Accepted Answer

The answer of Farnsworth, Inc., reports the following information in...

Question 13

Red Star Software Company's 2019 balance sheet reveals that inventories reported on a LIFO basis are $5,620 million. In a footnote, management stated that the LIFO reserve was $800 million.
a. How much would Red Star Software's ending inventory be using FIFO?
b. What is the total cumulative tax effect of using LIFO given a 35% income tax rate?

Accepted Answer

The answer of Red Star Software Company's 2019 balance sheet...

Question 14

LaGrange Company, which uses the periodic inventory system, has the following records for the year: 
  
Ending inventory at December 31 is 108 units. Compute the cost of the ending inventory and the cost of goods sold using the following methods:
a. FIFO
b. Weighted-average
c. LIFO

Accepted Answer

The answer of LaGrange Company, which uses the periodic inventory...

Question 15

Benson Company, which uses the periodic inventory system, has the following records for the year:
 
 Ending inventory at December 31 is 80 units. Compute the cost of the ending inventory and the cost of goods sold using the following methods:
a. FIFO
b. Weighted-average
c. LIFO

Accepted Answer

The answer of Benson Company, which uses the periodic inventory...

Question 16

At the beginning of the current period, SIic Industries has 150 units of a product with a unit cost of $160. The inventory records report the following transactions:
  During the current period, Slic sells 340 units.
Compute the cost of goods sold for the current period and the ending inventory balance for this product based on the following assumptions:
a. Slic uses the FIFO method.
b. Slic uses the LIFO method.
c. Slic uses the weighted-average cost method.

Accepted Answer

The answer of At the beginning of the current period,...

Question 17

Blue Danube Tires has the following inventory records for the month ending July 31:
 
 Blue Danube sold 140 tires during July. Compute the ending inventory and the cost of goods sold for the period using FIFO, LIFO, and weighted-average cost inventory methods.

Accepted Answer

The answer of Blue Danube Tires has the following inventory...

Question 18

A summary of inventory records for Carlton Company reveals the following:
 
During 2019, 35 units were sold at $600 per unit for total sales revenue of $21,000.
Compute cost of goods sold, gross profit, and the inventory balance for the current period under FIFO, LIFO, and weighted-average cost methods.

Accepted Answer

The answer of A summary of inventory records for Carlton...

Question 19

A summary of inventory records for Tank Company reveals the following:
 
 During 2019, 35 units were sold at $900 per unit, generating total sales revenue of $31,500.
Required:
a. Determine cost of goods sold, gross profit, and the inventory balance under LIFO method.
b. Determine the LIFO reserve for Tank Company.

Accepted Answer

The answer of A summary of inventory records for Tank...

Question 20

A firm's operating figures for three successive periods are shown below:
Assuming the following errors were made, compute the correct amount of gross profit for each period.

Accepted Answer

The answer of A firm's operating figures for three successive...

Quiz 7: Inventory

A company reports the following in its inventory records for June: During June, the company sold 12 units. Using the weighted-average cost method, compute the cost of goods sold for June and the June 30 ending inventory balance for this product.

Tisdell Fabricators, Inc., has 10 units in beginning inventory costing $15 each. It purchased 90 more for $12 each during the month. The company sold 80 units during the month. Calculate cost of goods sold using: a. FIFO b. Weighted-average cost c. LIFO

Sawyer Company reported the following net income amounts: 2016, $82,000; 2017, $50,000; and 2018, $40,000. In 2019, the company discovered errors that had been made in computing the ending inventories for 2016 and 2017, as follows: Compute the correct net incomes for 2016, 2017, and 2018.

As a shareholder of Benson Industries, a manufacturer of DVD players, you are interested in comparing gross profits over a 3-year period. Calculate the gross profit percentage for years 2019, 2018, and 2017 using the income statement items below (in thousands). Interpret your results.

The following are 2019 inventory data for Chavez Company, which uses a perpetual inventory system. Ending inventory at December 31 is 50 units. Compute the cost of the ending inventory using the following methods: a. First-in, first-out b. Weighted-average c. Last-in, first-out

The following are 2019 inventory data for Thames Company, which uses a perpetual inventory system. Ending inventory at December 31 is 125 units. Compute the cost of the ending inventory using the following methods: a. FIFO b. Weighted-average c. LIFO

Farnsworth, Inc., reports the following information in its annual report: Sales for 2019 totaled $4,200,000. Cost of goods sold under LIFO totaled $1,850,000. Compute Farnsworth's cost of goods sold and gross profit assuming it uses the FIFO method.

LaGrange Company, which uses the periodic inventory system, has the following records for the year: Ending inventory at December 31 is 108 units. Compute the cost of the ending inventory and the cost of goods sold using the following methods: a. FIFO b. Weighted-average c. LIFO

Benson Company, which uses the periodic inventory system, has the following records for the year: Ending inventory at December 31 is 80 units. Compute the cost of the ending inventory and the cost of goods sold using the following methods: a. FIFO b. Weighted-average c. LIFO

Blue Danube Tires has the following inventory records for the month ending July 31: Blue Danube sold 140 tires during July. Compute the ending inventory and the cost of goods sold for the period using FIFO, LIFO, and weighted-average cost inventory methods.

A firm's operating figures for three successive periods are shown below: Assuming the following errors were made, compute the correct amount of gross profit for each period.