Chapter 5: 12DQ (page 259)
What factors contribute to (or cause) inventory shrinkage?
Theft, damagers, and inaccurate physical count lead to shrinkage of inventory.
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A company reports the following beginning inventory and two purchases for the month of January. On January 26, the company sells 350 units. Ending inventory at January 31 totals 150 units.
Units | Unit Cost | |
Beginning Inventory on Jan 1 | 320 | $3.00 |
Purchase on Jan 9 | 80 | 3.20 |
Purchase on Jan 25 | 100 | 3.34 |
Required
Assume the perpetual inventory system is used and then determine the costs assigned to ending inventory when costs are assigned based on the FIFO method. (Round per unit costs and inventory amounts to cents.)
Question: Part B
Selected accounts and balances for the three months ended March 31, 2018, for Business Solutions follow:
January 1, Beginning Inventory | $0 |
Cost of goods sold | 14,052 |
March 31, Ending Inventory | 704 |
Required
1. Compute inventory turnover and days’ sales in inventory for the three months ended March 31, 2018.
2. Assess the company’s performance if competitors average 15 times for inventory turnover and 25 days for days’ sales in inventory.
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 the LIFO method. (Round per unit costs and inventory amounts to cents.)
Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March. (For specific identification, the March 9 sale consisted of 80 units from beginning inventory and 340 units from the March 5 purchase; the March 29 sale consisted of 40 units from the March 18 purchase and 120 units from the March 25 purchase.) Date Activities Units Acquired at Cost.
Date | Activities | Units acquired at cost | Units sold at retail |
March 1 | Beginning inventory | 100 units @ \(50.00 per unit | |
March 5 | Purchase | 400 units @ \)55.00 per unit | |
March 9 | Sales | 420 units @ \(85.00 per unit | |
March 18 | Purchase | 120 units @ \)60.00 per unit | |
March 25 | Purchase | 200 units @ \(62.00 per unit | |
March 29 | Sales | 160 units @ \)95.00 per unit | |
Total | 820 units | 580 units |
Required
3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. (Round all amounts to cents.)
Where is the amount of merchandise inventory disclosed in the financial statements?
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