Concept explainers
Inventory:
Inventory refers to the stock or goods which will be sold in the near future and thus is an asset for the company. It comprises of the raw materials which are yet to be processed, the stock which is still going through the process of production and it also includes completed products that are ready for sale. Thus inventory is the biggest and the important source of income and profit for the business.
Retail Inventory Method:
The method wherein cost of the goods sold as well as the value of the ending stock items are deduced by the using the cost and retail relationship is term as retail inventory method.
The ending inventory at cost with the use of retail inventory method.
2.
To compute: Company’s loss from shrinkage at cost and at retail.
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FINANCIAL ACCT.FUND.(LOOSELEAF)
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- Lower-of-cost-or market inventory Data on the physical inventory of Moyer Company as of December 31, 20Y9, are presented below. Quantity and cost data from the last purchases invoice of the year and the next-to-the-last purchases invoice are summarized as follows: Instructions Determine the inventory at cost and at the lower of cost or market, using the first-in, first-out method. Record the appropriate unit costs on an inventory sheet and complete the pricing of the inventory. When there are two different unit costs applicable to an item, proceed as follows: 1. Draw a line through the quantity, and insert the quantity and unit cost of the last purchase. 2. On the following line, insert the quantity and unit cost of the next-to-the-last purchase. 3. Total the cost and market columns and insert the lower of the two totals in the LCM column. The first item on the inventory sheet has been completed below as an example.arrow_forwardInventory Costing Methods Crandall Distributors uses a perpetual inventory system and has the following data available for inventory, purchases, and sales for a recent year. Required: 1. Compute the cost of ending inventory and the cost of goods sold using the specific identification method. Assume the ending inventory is made up of 40 units from beginning inventory, 30 units from Purchase 1, 80 units from Purchase 2, and 40 units from Purchase 3. 2. Compute the cost of ending inventory and cost of goods sold using the FIFO inventory costing method. 3. Compute the cost of ending inventory and cost of goods sold using the LIFO inventory costing method. 4. Compute the cost of ending inventory and cost of goods sold using the average cost inventory costing method. ( Note: Use four decimal places for per-unit calculations and round all other numbers to the nearest dollar.) 5. CONCEPTUAL CONNECTION Compare the ending inventory and cost of goods sold computed under all four methods. What can you conclude about the effects of the inventory costing methods on the balance sheet and the income statement?arrow_forwardRetail method; gross profit method Selected data on inventory, purchases, and sales for Celebrity Tan Co. and Ranchworks Co. are as follows: Instructions 1. Determine the estimated cost of the inventory of Celebrity Tan Co. on August 31 by the retail method, presenting details of the computations. 2. A. Estimate the cost of the inventory of Ranchworks Co. on November 30 by the gross profit method, presenting details of the computations. B. Assume that Ranchworks Co. took a physical inventory on November 30 and discovered that 369,750 of inventory was on hand. What was the estimated loss of inventory due to theft or damage during March through November?arrow_forward
- Retail Inventory Method The following data were available from Hegge Department Stores records for the year ended December 31, 2019: Required: Using the retail method, what is the estimate of the merchandise inventory at December 31, 2019, valued at the lower of cost or market: Round the cost-to-retail ratio to 3 decimal places.arrow_forwardFIFO perpetual inventory The beginning inventory at Dunne Co. and data on purchases and sales for a three-month period ending June 30 are as follows: Instructions 1. Record the inventory, purchases, and cost of goods sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3, using the first-in, first-out method. 2. Determine the total sales and the total cost of goods sold for the period. Journalize the entries in the sales and cost of goods sold accounts. Assume that all sales were on account. 3. Determine the gross profit from sales for the period. 4. Determine the ending inventory cost on June 30. 5. Based upon the preceding data, would you expect the ending inventory using the last-in, first-out method to be higher or lower?arrow_forwardBeginning inventory, purchases, and sales for WCS12 are as follows: Assuming a perpetual inventory system and using the weighted average method, determine (a) the weighted average unit cost after the October 22 purchase, (b) the cost of the merchandise sold on October 29, and (c) the inventory on October 31.arrow_forward
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