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Chapter 6: 14RQ (page 357)
How is days鈥� sales in inventory calculated, and what does it measure?
Days鈥� sales in inventory are calculated for getting the time period for converting to sales by comparing the number of days to the inventory turnover for a particular period.
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Some of L and K Electronics鈥檚 merchandise is gathering dust. It is now December 31, 2018, and the current replacement cost of the ending merchandise inventory is\(32,000 below the business鈥檚 cost of the goods, which was \)98,000. Before any adjustmentsat the end of the period, the company鈥檚 Cost of Goods Sold account has a balanceof $410,000.
Requirements
1. Journalize any required entries.
Steel It began January with 55 units of iron inventory that cost \(35 each. During January, the company completed the following inventory transactions:
Units Unit Cost Unit Sales Price
Jan. 3 Sale 45 \) 83
8 Purchase 75 $ 52
21 Sale 70 85
30 Purchase 10 55
Requirements
2. Prepare a perpetual inventory record for the merchandise inventory using theLIFO inventory costing method.
Question:Super Mart, a regional convenience store chain, maintains milk inventory by the gallon.
The first month鈥檚 milk purchases and sales at its Freeport, Florida, location follow:
Nov. 2 Purchased 11 gallons @ \(2.15 each
6 Purchased 2 gallons @ \)2.80 each
8 Sold 6 gallons of milk to a customer
13 Purchased 3 gallons @ $2.85 each
14 Sold 4 gallons of milk to a customer
Requirements
3. Determine the amount that would be reported in ending merchandise inventoryon November 15 using the weighted-average inventory costing method. Round allamounts to the nearest cent.
Steel Mill began August with 50 units of iron inventory that cost \(35 each. During August, the company completed the following inventory transactions:
Units Unit Cost Unit Sales Price
Aug. 3 Sale 45 \) 85
8 Purchase 90 $ 54
21 Sale 85 88
30 Purchase 15 58
Requirements
6. If the business wanted to maximize gross profit, which method would it select?
When does an inventory error cancel out, and why?
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