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Chapter 6: 1SE (page 358)
Determining inventory accounting principles
Ward Hardware used the FIFO inventory costing method in 2018. Ward plans to continue using the FIFO method in future years. Which accounting principle is most relevant to Ward鈥檚 decision?
The principle of consistency has been used in the given case.
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Futuristic Electronic Center began October with 65 units of merchandise inventory that cost \(82 each. During October, the store made the following purchases:
Oct. 3 25 units @ \) 90 each
12 30 units @ \( 90 each
18 35 units @ \) 96 each
Futuristic uses the periodic inventory system, and the physical count at October 31 indicates that 80 units of merchandise inventory are on hand.
Requirements
2. Net sales revenue for October totaled $28,000. Compute Futuristic鈥檚 gross profit for October using each method.
Question:Assume that Toys Galore store bought and sold a line of dolls during December as follows:
Dec. 1 Beginning merchandise inventory 13 units @ \( 9 each
8 Sale 8 units @ \) 22 each
14 Purchase 16 units @ \( 14 each
21 Sale 14 units @ \) 22 each
Requirements
1. Compute the cost of goods sold, cost of ending merchandise inventory, and grossprofit using the FIFO inventory costing method.
Question:This problem continues the Canyon Canoe Company situation from Chapter 5. At the beginning of the January 2019, Canyon Canoe Company decided to carry and sellT-shirts with its logo printed on them. Canyon Canoe Company uses the perpetualinventory system to account for the inventory. During February 2019, Canyon CanoeCompany completed the following merchandising transactions:
Feb. 2 Sold 60 T-shirts at \(10 each.
5 Purchased 50 T-shirts at \)6 each.
7 Sold 45 T-shirts for \(10 each.
8 Sold 20 T-shirts for \)10 each.
10 Canyon Canoe Company realized the inventory was running
low, so it placed a rush order and purchased 20 T-shirts. The
premium cost for these shirts was \(7 each.
12 Placed a second rush order and purchased 40 T-shirts at \)7
each.
13 Sold 20 T-shirts for \(10 each.
15 Purchased 50 T-shirts for \)6 each.
20 In order to avoid future rush orders, purchased 150 T-shirts.
Due to the volume of the order, Canyon Canoe Company
was able to negotiate a cost of \(5 each.
21 Sold 40 T-shirts for \)10 each.
22 Sold 35 T-shirts for \(10 each.
24 Sold 20 T-shirts for \)10 each.
25 Sold 45 T-shirts for \(10 each.
27 Sold 40 T-shirts for \)10 each.
Requirements
2. Provide a summary for the month, in both units and dollars, of the change in inventory in the following format:
Number of T-shirts | Dollar Amount | |
Beginning Balance | ||
Add: Purchases | ||
Less: Cost of goods sold | ||
Ending Balance |
Question:Broadway Communications reported the following figures in its annual financial statements:
Cost of Goods Sold $ 18,400
Beginning Merchandise Inventory 560
Ending Merchandise Inventory 450
Compute the rate of inventory turnover and days鈥� sales in inventory for BroadwayCommunications. (Round to two decimal places.)
Question:Golf Unlimited carries an inventory of putters and other golf clubs. The sales price of each putter is \(119. Company records indicate the following for a particular line ofGolf Unlimited鈥檚 putters:
Date Item Quantity Unit Cost
Nov. 1 Balance 24 \) 53
6 Sale 20
8 Purchase 30 70
17 Sale 30
30 Sale 2
Requirements
1. Prepare a perpetual inventory record for the putters assuming Golf Unlimited usesthe FIFO inventory costing method. Then identify the cost of ending inventoryand cost of goods sold for the month.
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