FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Related questions
Question
Transcribed Image Text:# Inventory Principles
### 1. Shepherd Cycles used the FIFO inventory method in 2010. Shepherd Cycles plans to continue using the FIFO method in future years.
**A. Which inventory principle is most relevant to Shepherd’s decision?**
*Enter answer here.*
### 2. Shepherd Cycles does not expect prices to change dramatically and wants to use a method that averages price changes.
**B. Which inventory method would best meet Shepherd’s goal?**
*Enter answer here.*
**C. What if Shepherd wanted to expense out the newer purchases of goods instead? Which inventory would best meet that need?**
*Enter answer here.*
### 3. Refer to the information below that shows Boston Cycles’ inventory data for the year ending December 31, 2011. Answer the following questions:
- Assume that the ending inventory was accidentally overstated by $2,200.
*Enter answer here.*
- What are the correct amounts for cost of goods sold and gross profit?
*Enter answer here.*
#### Inventory Data Table
The table below provides the financial figures for Boston Cycles for the year ending December 31, 2011:
| Main Description | Secondary Description | Amount |
|-----------------------------------|-----------------------|---------|
| **Sales revenue** | | $46,000 |
| **Cost of goods sold:** | | |
| | Beginning inventory | $5,400 |
| | Net purchases | $26,700 |
| | **Cost of goods available** | $32,100 |
| | Less: Ending inventory| ($3,600) |
| | **Cost of goods sold**| $28,500 |
| **Gross profit** | | $17,500 |
This table outlines the computation of gross profit by deducting the cost of goods sold from the sales revenue. Note the components that contribute to the cost of goods sold, including beginning inventory, net purchases, and ending inventory.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution
Trending nowThis is a popular solution!
Step by stepSolved in 2 steps
Knowledge Booster
Similar questions
- PLEASE FILL IN THE CIRCLED BOXES. THE REST OF THE VALUES IN OTHER BOXES ARE CORRECT. Note:- • Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. • Answer completely. • You will get up vote for sure.arrow_forwardOn December 31, 2023, Jen & Mink Clothing (J&M) performed the inventory count and determined the year-end ending inventory value to be $77500, it is now January 8, 2024, and you have been asked to double-check the year-end inventory listing. J&M uses a perpetual inventory system Note: Only relevant items are shown on the inventory listing. # 1 2 Jen & Mink Clothing Inventory Listing December 31, 2023 Inventory Number Inventory Description Quantity (units) Blue jackets. Black pants 7649 10824 104 308 Unit Cost ($) Total Value ($) 24 2,496 5,852 19 Total Inventory $77,500 The following situations have been brought to your attention: a. On January 3, 2024, J&M received a shipment of 104 blue jackets, for $2,496 (Item #7649). The inventory was purchased December 23, 2023, FOB destination from Global Threads. This inventory was included in J&M's inventory count and inventory listing. b. On December 29, 2023, J&M sold scarves (Item # 5566) to a customer with a sale price of $740 and cost of…arrow_forwardTyler Sporting Equipment uses the periodic inventory system and had the following inventory m during 2022 as shown below. Beginning Inventory, January 1, 2021 Purchases: January 18 March 3 June 30 October 18 Ending Inventory, December 31, 2021 Show your work here: Unite Unit Cost 37 $10 Answer Ending inventory 21 26 31 37 16 11 11 What is the cost of the ending inventory and the cost of goods sold? Assume the company utilizes the LIFO method. Show all of your work in the worksheet space provided. Round your answers to 2 decimal places. 9 10 Cost of goods soldarrow_forward
- What is the ending inventory value?arrow_forwardAdjusting Balance Sheet and Income Statement for LIFO to FIFO In its December 2019 10-K, Phillips 66 reported the following information ($ millions). 2019 Assets 2019 Inventories 2019 LIFO Reserve 2018 LIFO Reserve Tax Rate $52,848 $3,398 $3,870 $2,610 22% a. Determine the necessary adjustments to the following balance sheet line items for 2019. Note: Round your answers to the nearest whole dollar. Adjustment (S in millions) Inventories $4 6,008 x Total assets %24 Deferred tax liabilkies $ 54,108 x 277 x Equity 0 x b. Determine the necessary adjustments to the following income statement line items for 2019. Note: Round your answers to the nearest whole dollar. Adjustment ($ in millions) Cost of goods sold %24 0 x Pretax income %24 0 x Income tax expense $ 0 x Net income %24arrow_forwardPatel Company adopted the dollar-value inventory method on 12/31 / 20 . Inventory data are as follows: Inventory Price Year at Yr End Index 2020 5,785 1.00 2021 9,2501.23 202211,225 1.36 20238,575 1.25 2024 16,425 1.40 Instructions : Calculate the inventory for must show your work . 20, 2021, 2022, 20 and 2024.arrow_forward
- Goddard Company has used the FIFO method of inventory valuation since it began operations in 2018. Goddard decided to change to the average cost method for determining inventory costs at the beginning of 2021. The following schedule shows year-end inventory balances under the FIFO and average cost methods: Year FIFO Average Cost 2018 $45,100 2019 78,300 2020 83,400 $54,200 71,100 78,300 Required: 1. Ignoring income taxes, prepare the 2021 journal entry to adjust the accounts to reflect the average cost method. 2. How much higher or lower would cost of goods sold be in the 2020 revised income statement? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Ignoring income taxes, prepare the 2021 journal entry to adjust the accounts to reflect the average cost method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the adjustment…arrow_forwardIdentify which of the following statement is correct for perpetual inventory system? When valuing ending inventory under a perpetual inventory system, weighted average cost method requires that a new weighted average unit cost be calculated after every sale. When valuing ending inventory under a perpetual inventory system, valuation using weighted average is the same as the valuation using weighted average under the periodic inventory system. When valuing ending inventory under a perpetual inventory system, oldest units purchased during the period using FIFO are allocated to the cost of goods sold when units are sold. 5 Under the perpetual inventory system, on the purchase of inventory purchase account is debited. 7arrow_forwardJBD, Inc. has the following information pertaining to it 2025 ending inventory. Requirements: Calculate the value of ending inventory using the following methods: LCM for each individual inventory item LCM for aggregated inventory. Record any necessary journal entries for each of the above methods, assuming the amount is material. Explain the purpose of applying the LCM rule to inventory Item Quantity Cost per Each Market Cost per Each Records Market LCM Each LCM Total R55 300 10 7.5 S49 150 15 12 T21 350 8 6 E33 600 33 35 Date Account Debit Creditarrow_forward
- Kingbird Company has used the dollar-value LIFO method for inventory cost determination for many years. The following data were extracted from Kingbird's records. Price Ending Inventory Date Index at Base Prices Ending Inventory at Dollar-Value LIFO December 31, 2025 105 $92,700 $86,600 December 31, 2026 ? 97,700 92,150 Calculate the index used for 2026 that yielded the above results. Index used for 2026arrow_forwardI need help with this hw problem pls. Thank you!arrow_forwardPlease just answer question 3arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education