Periodic Inventory by Three Methods:

The units of an item available for sale during the year were as follows:

Jan. 1       Inventory    18 units at $1,440

Feb. 17     Purchase     36 units at $1,656

July 21      Purchase     42 units at $1,872

Nov. 23     Purchase     24 units at $1,980

There are 32 untis of the item in the physical inventory at December 31. The periodic inventory system is used. 

a. Determine the inventory cost by the FIFO method.

b. Determine the invnetory cost by the LIFO method.

c. Determine the invnetory cost by the weigthed average cost method. 

a.$62,496

FIFO: (24 x $1,980) + ((32 - 24) x $1,872) = $62,496

b. $49,104

LIFO: (18 x $1,440) + ((32 - 18) x $1,656) =$49,104

c. $56,448

WEIGHTED AVERAGE COST: 

Jan. 1       Inventory    18 units at $1,440

Feb. 17     Purchase     36 units at $1,656

July 21      Purchase     42 units at $1,872

Nov. 23     Purchase     24 units at $1,980

                Totals         120          $211,680

 $211,680 / 120 = $1,764 x 32 units = $56,448

In regards to the Inventory at the Lower of Cost or Market, choose the lower cost.

True 

False

In 2014, Yellow River Supply Co. incorrectly counted its inventory as $324,650 instead of the correct amount of $338,500.

State the effect of the error on the:

a. Cost of Merchandise Sold.

b. Gross Profit

c. Net Income

If uncorrected, what would be the effect of teh eror on the 2015 income statement?

d. Cost of Merchandise Sold

e. Gross Profit

f. Net Income

a. Overstated

b. Understated

c. Understated

d. Understated

e. Overstated

f. Overstated

Consider the following data:

                                                   Apple           Dell

Cost of goods sold                       $39,541,000  $682,368

Inventory, end of year                   1,051,000    179,730

Inventory, beginning of the year      455,000      163,956

Determine the inventory turnover for (a.) Apple and (b.) Dell. Round to one decimal place. 

a. 52.2

$39,541,000 / ((1,051,000 + 455,000) / 2) = 52.2

b. 4

$682,368 / ((179,730 + 163,956) / 2) = 4

*Side Note: 

Inventory Turnover = Cost of Goods Sold / ((Begining Inventory + Ending Inventory) / 2)

Consider the Following Data:

                                               Cost            Retail

Merchandise Inventory, June 1    165,000       275,000

Purchases in June (net)              2,361,500    3,800,000

Merchandise Available for Sale    2,526,500    4,075,000

Sales                                                        3,550,000

Determine the following:

a. ratio of cost to retail price

b. Merchandise inventory, June 30, at retail price

c. Merchandise inventory, June 30, at estimated cost

a. 62 %

b. $525,000

c. $325,500

                                               Cost            Retail 

Merchandise Inventory, June 1    165,000       275,000

Purchases in June (net)              2,361,500    3,800,000

Merchandise Available for Sale    2,526,500    4,075,000

Ratio of cost to retail Price: (2,526,000 / 4,075,000) 62% 

Sales                                                        3,550,000

Merchandise Inventory, June 30, at retail price  

(4,075,000 - 3,550,000) $525,000

Merchandise Inventory, June 30, at estimated cost (525,000 x .62) $325,500

Cost of Merchandise Sold

(Equation)

Estimated Ending Merchandise Inventory

(Equation)

Given the data from Chapter 06 H.W. page 11, determine:

a. Total Sales

b.Total Cost of Merhandise Sold

c. Gross Profit from Sales

a. $483,800

(Sum of all SALES from Non-LIFO)

b. $293,000

(Sum of all SALES from LIFO)

c.$189,900

$483,800 - $293,000 = 189,900