Chapter 6 Inventories and cost of sales
Mercedes Brown starts a merchandising business on December 1 and enters into three inventory purchases:December 7 / 10 units @ $ 9 costs
December 14 / 20 units @ $ 10 costs
December 21 / 15 units @ $ 12 costs
Brown sells 18 units for each $35 each on December 15. Seven of the sold units are from the December 7 purchase and eleven are from the December 14 purchase. Brown uses a perpetual inventory system. Determine the costs assigned to the December 31 ending inventory based on (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. (Round per unit costs to three decimals, but inventory balances to the dollar.)
1. Jabar Company has shipped $600 of goods to Chi Co. has arranged to sell the goods for Jabar. Identify the consignor and the consignee. Which company should include any unsold goods as part of its inventory?
2. At year-end, Liu Co, had shipped $750 of merchandise FOB destination to Kwon Co. which company should include the $750 of merchandise in transit as part of its year-end inventory?
A car dealer acquired a used car for $17,500, terms FOB shipping point. Additional costs in obtaining and offering the car for sale include $300 for transportation-in, $1,000 for import duties, $250 for insurance during shipment, $400 for advertising, and $3,000 for sales staff salaries. For computing inventory, what cost is assigned to the uses car?
Apoli Trading Co, has the following products in its ending inventory. Compute lower of cost or market for inventory (a) as a whole and (b) applied separately to each product.Product / Quantity / Cost per unit / Market per unit
Mountain bikes / 20 / $650 / $500
Skateboards / 22 / 400 / 450
Gliders / 40 / 850 / 790
Harper Co, reported the following current-year purchases and sales date for its only product.Date / Activities / Units Acquired at cost / Units sold at retail
Jan. 1 / Beginning inventory / 126 units @ $ 8 = $1,008
Jan. 10 / Sales / 113 units @ $40
Mar. 14 / Purchase / 315 units @ $13 = 4,095
Mar. 15 / Sales / 180 units @ $40
July 30 / Purchase / 250 units @ $18 = 4,500
Oct. 5 / Sales / 378 units @ $40
Oct. 26 / Purchase / 50units @ $23 = 1,150
Totals / 741 units / $10,753 / 671,units
Harper uses a perpetual inventory system. Determine the costs assigned to ending inventory and to cost of goods sold using (a) FIFO and (b) LIFO. Compute the gross margin for each method.
Maya Company's ending inventory includes the following items. Compute the lower of cost or market for ending inventory (a) as a whole and (b) applied separately to each product.Per Unit
Product / Units / Costs / Market
Helmets / 19 / $45 / $49
Bats / 12 / 73 / 67
Shoes / 33 / 90 / 86
Uniforms / 37 / 31 / 31