Chapter 5: 11QS (page 260)
Refer to the information in QS 5-10 and assume the perpetual inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the LIFO method. (Round per unit costs and inventory amounts to cents.)
Ending Inventory totals$330.
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Refer to the information in QS 5-10 and assume the periodic inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on specific identification. Of the units sold, eight are from the December 7 purchase and seven are from the December 14 purchase. (Round per unit costs and inventory amounts to cents.)
Refer to the information in Exercise 5-7 and assume the periodic inventory system is used. Determine the costs assigned to ending inventory and to cost of goods sold using (a) FIFO and (b) LIFO. Then (c) compute the gross margin for each method.
Montoure Company uses a perpetual inventory system. It entered into the following calendar-year purchases and sales transactions. (For specific identification, units sold consist of 600 units from beginning inventory, 300 from the February 10 purchase, 200 from the March 13 purchase, 50 from the August 21 purchase, and 250 from the September 5 purchase.)
Date | Activities | Units acquired at cost | Units sold at retail |
Jan 1 | Beginning inventory | 600 units @ \(45.00 per unit | |
Feb 10 | Purchases | 400 units @ \)42.00 per unit | |
March 13 | Purchases | 200 units @ \(27.00 per unit | |
March 15 | Sales | 800 units @ \)75.00 per unit | |
Aug 21 | Purchases | 100 units @ \(50.00 per unit | |
Sep 5 | Purchases | 500 units @ \)46.00 per unit | |
Sep 10 | Sales | 600 units @ $75.00 per unit | |
Total | 1,800 units | 1,400 units |
Required
Compute the number of units in ending inventory.
Vibrant Company had \(850,000 of sales in each of three consecutive years 2016–2018, and it purchased merchandise costing \)500,000 in each of those years. It also maintained a \(250,000 physical inventory from the beginning to the end of that three-year period. In accounting for inventory, it made an error at the end of year 2016 that caused its year-end 2016 inventory to appear on its statements as \)230,000 rather than the correct $250,000.
Prepare comparative income statements as in Exhibit 5.11 to show the effect of this error on the company’s cost of goods sold and gross profit for each of the years 2016–2018.
Question: Comparative figures for Apple and Microsoft follow
| \( million | Apple | Microsoft | ||||
| Current year | One year Prior | Two years prior | Current year | One year Prior | Two years prior | |
Inventory | \)2,349 | \(2,111 | \)1,764 | \(2,902 | \)2,660 | $1,938 |
Cost of Sales | 140,089 | 112,258 | 106,606 | 33,038 | 27,078 | 20,385 |
Required
Comment on and interpret your findings from parts 1 and 2. Assume an industry average for inventory turnover of 15.
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