Q1. Diane makes one product. Diana adopted the dollar-value LIFO inventory method on 12-31-12. Her ending inventory at 12-31-12 was $55,000. Additional inventory data follows:
|
Year
|
Inventory at year-end prices
|
Price index (base year 2012)
|
Cost of goods manufacturing during the year
|
|
2013
|
$56,280
|
1.005
|
$150,000
|
|
2014
|
$54,540
|
1.010
|
$160,000
|
|
2015
|
$57,798
|
0.014
|
$155,000
|
|
2016
|
$58,986
|
1.017
|
$170,000
|
|
2017
|
$55,917
|
1.026
|
$145,000
|
|
2018
|
$57,680
|
1.030
|
$155,000
|
Compute the inventory at December 31, 2013, 2014, 2015, 2016, 2017 and 2018 AND the cost of goods sold for each year assuming Diane uses the dollar-value LIFO method for each year.
Q2. Hartley's accounting records included the following information:
Inventory, 01-01-13 $96,250
Purchases during 2013 (excluding shipping) $1,450,180
Purchase returns during 2013 $57,500
Freight-in on 2013 purchases $33,075
Sales during 2013 $2,467,500
Hartley completed a physical inventory on 12-31-13 and calculated an ending inventory of $106,000, at cost. In recent years, Hartley's gross profit equaled 75% of Hartley's cost. Hartley suspects some inventory may have been shoplifted. Prepare the entry, if necessary, to reflect the estimated loss from any shoplifted items.
Q3. Gage's accounting records included the following information:
Inventory, 01-01-15 $51,000
Purchases during 2015 $705,000
Sales during 2015 $1,662,000
Sales returns during 2015 $66,480
Gage completed a physical inventory on 12-31-15 and calculated an ending inventory of $80,000, at retail selling price. In recent years, Gage's gross profit equaled 55% of Gage's selling price. Gage suspects some inventory may have been shoplifted. Prepare the entry, if necessary, to reflect the estimated loss from any shoplifted items.
Q4. As of 12-31-15, Zena Company has four different inventory items on hand. Data on the four items follows:
|
Item
|
Quantity on hand
|
Unit cost
|
Expected selling price
|
Estimated disposal costs
|
|
C3Z22P3
|
450
|
$30.75
|
$40
|
$3
|
|
PQ27845
|
15
|
$ 9.50
|
$10
|
$2
|
|
ZT15577
|
235
|
$17.00
|
$29
|
$0
|
|
SF98888
|
45
|
$43.00
|
$50
|
$9
|
Using the lower-of-cost-or-net realizable value approach applied on an individual-item basis, determine if Zena needs to make an entry to write her inventory down. If so, prepare the entry Zena should make
Q5. As of 12-31-15, Acme Company has three different inventory items on hand. Data on the three items follows:
|
Item
|
Quantity on hand
|
Unit cost (Acme uses LIFO)
|
Replacement cost
|
Normal profit
|
Expected selling price
|
Estimated disposal costs
|
|
A
|
57
|
$450
|
$625
|
$800
|
$1,500
|
$100
|
|
B
|
42
|
$200
|
$300
|
$230
|
$400
|
$25
|
|
C
|
15
|
$780
|
$800
|
$300
|
$1,000
|
$250
|
Using the lower-of-cost-or-market approach applied on an individual-item basis, determine if Acme needs to make an entry to write her inventory down. If so, prepare the entry Acme should make
Q6. Andre paid $1,200,000 to purchase 15,000 chairs. The 15,000 chairs consisted of 4 different chair types/styles: 3,500 rockers that Andre expects to sell for $125 each, 5,000 gliders that Andre expects to sell for $200 each, 2,000 straight-back chairs that Andre expects to sell for $100 each, and 4,500 recliners that Andre expects to sell for $150. Using the relative sales value method:
- What is the cost of one individual rocker? Round your answer to the nearest penny.
- What will be Andre's gross profit amount if he sells 400 straight-back chairs? Round your answer to the nearest dollar.
- If at the end of the accounting period, Andre has 3,000 recliners on hand, what will Andre report as his recliner ending inventory? Round your answer to the nearest dollar.
NOTE - when performing your calculations, make sure that you have allocated 100% of the $1,200,000 to the 4 different chair types. I suggest you use an excel spreadsheet (with formulas) to ensure you allocate the ENTIRE $1,200,000.