Chapter 5: 8QS (page 260)
Refer to the information in QS 5-4 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.)
Ending Inventory of business entity totals$450.
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Explain the following statement: “Inventory errors correct themselves.”
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
4. Compute gross profit earned by the company for each of the four costing methods in part 3.
Refer to the information in Problem 5-3A and assume the periodic inventory system is used.
Required
2. Compute the number of units in ending inventory.
Ames Trading Co. has the following products in its ending inventory. Compute lower of cost or market for inventory applied separately to each product.
Product | Quantity | Cost per unit | Market per unit |
Mountain bikes | 11 | \(600 | \)550 |
Skate Boards | 13 | 350 | 425 |
Gliders | 23 | 800 | 700 |
Refer to the information in Problem 5-3A and assume the periodic inventory system is used.
Required
Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. (Round all amounts to cents.)
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