ACG- Connect Ch. 5

-
6. In 2017, Dakota Company had net sales (at retail) of $141,000.
 
At Cost
At Retail
Beginning inventory

$
33,000


$
65,300

Cost of goods purchased


55,992



99,500


The above additional information is available from its records at the end of 2017. Use the retail inventory method to estimate Dakota's 2017 ending inventory at cost. (Round cost ratio to the nearest whole percentage.)
 
Explanation
At Cost

At Retail
Goods available for sale






Beginning inventory
$
33,000

$
65,300

Cost of goods purchased

55,992


99,500

Goods available for sale
$
88,992


164,800

Deduct net sales at retail




141,000

Ending inventory at retail



$
23,800

Cost ratio: ($88,992 / $164,800) = 0.54






Ending inventory at cost ($23,800 × 54%)
$
12,852







7.
On January 1, JKR Shop had $650,000 of inventory at cost. In the first quarter of the year, it purchased $1,790,000 of merchandise, returned $25,100, and paid freight charges of $39,600 on purchased merchandise, terms FOB shipping point. The company's gross profit averages 30%, and the store had $2,200,000 of net sales (at retail) in the first quarter of the year. Use the gross profit method to estimate its cost of inventory at the end of the first quarter.
  


Explanation







Goods available for sale







Inventory, January 1
$
650,000





Net cost of goods purchased*

1,804,500





Goods available for sale

2,454,500





Less estimated cost of goods sold







Net sales




$
2,200,000

Estimated cost of goods sold
[$2,200,000 × (1 – 30%)]

(1,540,000
)




Estimated March 31 inventory
$
914,500





 
* $1,790,000 – $25,100 + $39,600 = $1,804,500




8. Required information
[The following information applies to the questions displayed below.]

Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.
 
Date
Activities
Units Acquired at Cost
Units Sold at Retail

Mar.
1

Beginning inventory

140
units
@ $51.80 per unit





Mar.
5

Purchase

245
units
@ $56.80 per unit





Mar.
9

Sales





300
units
@ $86.80 per unit

Mar.
18

Purchase

105
units
@ $61.80 per unit





Mar.
25

Purchase

190
units
@ $63.80 per unit





Mar.
29

Sales





170
units
@ $96.80 per unit




Totals

680
units


470
units

Required:
1. Compute cost of goods available for sale and the number of units available for sale.


9.
Required information
[The following information applies to the questions displayed below.]

Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.
 
Date
Activities
Units Acquired at Cost
Units Sold at Retail

Mar.
1

Beginning inventory

140
units
@ $51.80 per unit





Mar.
5

Purchase

245
units
@ $56.80 per unit





Mar.
9

Sales





300
units
@ $86.80 per unit

Mar.
18

Purchase

105
units
@ $61.80 per unit





Mar.
25

Purchase

190
units
@ $63.80 per unit





Mar.
29

Sales





170
units
@ $96.80 per unit




Totals

680
units


470
units

2. Compute the number of units in ending inventory.


Explanation
Units available (from part 1)
680
units
Less: Units sold (300 + 170)
470
units
Ending inventory (units)
210
units

10.
Required information
[The following information applies to the questions displayed below.]

Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.
 
Date
Activities
Units Acquired at Cost
Units Sold at Retail

Mar.
1

Beginning inventory

140
units
@ $51.80 per unit





Mar.
5

Purchase

245
units
@ $56.80 per unit





Mar.
9

Sales





300
units
@ $86.80 per unit

Mar.
18

Purchase

105
units
@ $61.80 per unit





Mar.
25

Purchase

190
units
@ $63.80 per unit





Mar.
29

Sales





170
units
@ $96.80 per unit




Totals

680
units


470
units

3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification, the March 9 sale consisted of 85 units from beginning inventory and 215 units from the March 5 purchase; the March 29 sale consisted of 65 units from the March 18 purchase and 105 units from the March 25 purchase.
Perpetual FIFO:
Goods Purchased
Cost of Goods Sold
Inventory Balance
Date
# of units
Cost per unit
# of units sold
Cost per unit
Cost of Goods Sold
# of units
Cost per unit
Inventory Balance
March 1
140
@
$51.80
=
$7,252.00
March 5
245
@
$56.80
140
@
$51.80
=
$7,252.00
245
@
$56.80
=
13,916.00
$21,168.00
March 9
140
@
$51.80
=
$7,252.00
@
$51.80
160
@
$56.80
=
9,088.00
85
@
$56.80
=
4,828.00
$16,340.00
$4,828.00
March 18
105
@
$61.80
@
$51.80
85
@
$56.80
=
4,828.00
105
@
$61.80
=
6,489.00
$11,317.00
March 25
190
@
$63.80
@
$51.80
85
@
$56.80
=
4,828.00
105
@
$61.80
=
6,489.00
190
@
$63.80
=
12,122.00
$23,439.00
March 29
@
$51.80
=
$0.00
@
$51.80
85
@
$56.80
=
4,828.00
@
$56.80
85
@
$61.80
=
5,253.00
20
@
$61.80
=
1,236.00
@
$63.80
=
0.00
190
@
$63.80
=
12,122.00
$10,081.00
$13,358.00
Totals
$26,421.00
$13,358.00


Perpetual LIFO:
Goods Purchased
Cost of Goods Sold
Inventory Balance
Date
# of units
Cost per unit
# of units sold
Cost per unit
Cost of Goods Sold
# of units
Cost per unit
Inventory Balance
March 1
140
@
$51.80
=
$7,252.00
March 5
245
@
$56.80
140
@
$51.80
=
$7,252.00
245
@
$56.80
=
13,916.00
$21,168.00
March 9
55
@
$51.80
=
$2,849.00
85
@
$51.80
=
$4,403.00
245
@
$56.80
=
13,916.00
@
$56.80
=
$16,765.00
$4,403.00
March 18
105
@
$61.80
85
@
$51.80
=
$4,403.00
@
$56.80
105
@
$61.80
=
6,489.00
$10,892.00
March 25
190
@
$63.80
85
@
$51.80
=
$4,403.00
0
@
$56.80
105
@
$61.80
=
6,489.00
190
@
$63.80
12,122.00
$23,014.00
March 29
@
$51.80
=
$0.00
85
@
$51.80
=
$4,403.00
0
@
$56.80
=
0.00
@
$56.80
0
@
$61.80
=
0.00
105
@
$61.80
=
6,489.00
170
@
$63.80
=
10,846.00
20
@
$63.80
=
1,276.00
$10,846.00
$12,168.00
Totals
$27,611.00
$12,168.00

Weighted Average Perpetual:
Goods Purchased
Cost of Goods Sold
Inventory Balance
Date
# of units
Cost per unit
# of units sold
Cost per unit
Cost of Goods Sold
# of units
Cost per unit
Inventory Balance
March 1
140
@
$51.80
=
$7,252.00
March 5
245
@
$56.80
140
@
$51.80
=
$7,252.00
245
@
$56.80
=
13,916.00
Average
385
@
$54.98
=
$21,168.00
March 9
300
@
$54.98
=
$16,494.00
85
@
$54.98
=
$4,673.30
March 18
105
@
$61.80
85
@
$54.98
=
$4,673.30
105
@
$61.80
=
6,489.00
Average
190
@
$58.75
=
$11,162.30
March 25
190
@
$63.80
85
@
$54.98
=
$4,673.30
105
@
$61.80
=
6,489.00
190
@
$63.80
=
12,122.00
380
@
$61.27
=
$23,284.30
March 29
170
@
$61.27
=
$10,415.90
210
@
$61.27
=
$12,866.70
Totals
$26,909.90

Specific Identification:
Goods Purchased
Cost of Goods Sold
Inventory Balance
Date
# of units
Cost per unit
# of units sold
Cost per unit
Cost of Goods Sold
# of units
Cost per unit
Inventory Balance
March 1
140
@
$51.80
=
$7,252.00
March 5
245
@
$56.80
140
@
$51.80
=
$7,252.00
245
@
$56.80
=
13,916.00
$21,168.00
March 9
85
@
$51.80
=
$4,403.00
55
@
$51.80
=
$2,849.00
215
@
$56.80
=
12,212.00
30
@
$56.80
=
$1,704.00
$16,615.00
$4,553.00
March 18
105
@
$61.80
55
@
$51.80
=
$2,849.00
30
@
$56.80
=
1,704.00
105
@
$61.80
=
6,489.00
$11,042.00
March 25
190
@
$63.80
55
@
$51.80
=
$2,849.00
30
@
$56.80
=
1,704.00
105
@
$61.80
=
6,489.00
190
@
$63.80
=
12,122.00
$23,164.00
March 29
@
$51.80
=
$0.00
55
@
$51.80
=
$2,849.00
0
@
$56.80
=
0.00
30
@
$56.80
=
1,704.00
65
@
$61.80
=
4,017.00
40
@
$61.80
=
2,472.00
105
@
$63.80
=
6,699.00
85
@
$63.80
=
5,423.00
$10,716.00
$12,448.00
Totals
$27,331.00
$12,448.00
11.
Required information
[The following information applies to the questions displayed below.]

Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.
 
Date
Activities
Units Acquired at Cost
Units Sold at Retail

Mar.
1

Beginning inventory

140
units
@ $51.80 per unit





Mar.
5

Purchase

245
units
@ $56.80 per unit





Mar.
9

Sales





300
units
@ $86.80 per unit

Mar.
18

Purchase

105
units
@ $61.80 per unit





Mar.
25

Purchase

190
units
@ $63.80 per unit





Mar.
29

Sales





170
units
@ $96.80 per unit




Totals

680
units


470
units

4. Compute gross profit earned by the company for each of the four costing methods. For specific identification, the March 9 sale consisted of 85 units from beginning inventory and 215 units from the March 5 purchase; the March 29 sale consisted of 65 units from the March 18 purchase and 105 units from the March 25 purchase. (Round weighted average cost per unit to two decimals and final answers to nearest whole dollar.)



Explanation
Sales = (300 units × $86.80) + (170 units × $96.80) = $42,496
Reference links

12.
The records of Alaska Company provide the following information for the year ended December 31.
  
At Cost

At Retail
January 1 beginning inventory
$
473,050

$
928,850
Cost of goods purchased

2,771,405


6,281,050
Sales




5,512,700
Sales returns




46,300
 
Required:
1. Use the retail inventory method to estimate the company’s year-end inventory at cost. 
2. A year-end physical inventory at retail prices yields a total inventory of $1,692,800. Prepare a calculation showing the company’s loss from shrinkage at cost and at retail.
 

Explanation
1.

ALASKA COMPANY
Estimated Inventory
December 31

At Cost

At Retail
Goods available for sale






Beginning inventory
$
473,050

$
928,850

Cost of goods purchased

2,771,405


6,281,050

Goods available for sale
$
3,244,455

$
7,209,900

Sales




5,512,700

Less: Sales returns




(46,300
)
Net sales




5,466,400

Ending inventory at retail ($7,209,900 − $5,466,400)



$
1,743,500

Cost-to-retail ratio: $3,244,455 / $7,209,900 = 0.45 or 45%
Ending inventory at cost ($1,743,500 × 45%)
$
784,575





2.
Estimated physical inventory at cost:  $1,692,800 × 45% = $761,760
13.

WAYWARD COMPANY
Estimated Inventory at March 31
Goods available for sale






Inventory, January 1
$
320,260




Cost of goods purchased

959,050




Goods available for sale
$
1,279,310




Less estimated cost of goods sold






Sales



$
1,211,150

Less sales returns




(9,650
)
Net sales



$
1,201,500

Estimated cost of goods sold [$1,201,500 × (1 – 25%)]

(901,125
)



Estimated March 31 inventory
$
378,185






Comments

Post a Comment

Popular posts from this blog

ACG2021-Connect Ch.4

-
Image
Required information Allied Merchandisers was organized on May 1. Macy Co. is a major customer (buyer) of Allied (seller) products.   May 3 Allied made its first and only purchase of inventory for the period on May 3 for 1,000 units at a price of $10 cash per unit (for a total cost of $10,000). 5 Allied sold 500 of the units in inventory for $14 per unit (invoice total: $7,000) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $5,000. 7 Macy returns 50 units because they did not fit the customer’s needs (invoice amount: $700). Allied restores the units, which cost $500, to its inventory. 8 Macy discovers that 50 units are scuffed but are still of use and, therefore, keeps the units. Allied sends Macy a credit memorandum for $300 toward the original invoice amount to compensate for the damage. 15 Allied recei
Read more

ACG- Connect Ch.9

-
Image
Sylvestor Systems borrows $195,000 cash on May 15, 2017, by signing a 120-day, 6% note. 1.  On what date does this note mature? September 11, 2017 September 12, 2017 Correct September 13, 2017 September 14, 2017 September 15, 2017 2.  Assume the face value of the note equals $195,000, the principal of the loan.   Explanation Maturity date = May 15 + 120 days = September 12, 2017. Required information [The following information applies to the questions displayed below.] BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $118,500 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.6% and SUTA taxes are 2.9% of the first $7,000 paid to its employee. Gross Pay through August Gross Pay for September a. $ 6,400 $ 1,700 b.
Read more