Chapter 5: Q14DQ (page 259)
Refer to Apple’s financial statements in Appendix A. On September 26, 2015, what percent of current assets is represented by inventory?
Page: 1129
Inventory of the business entity is2.63% of total current assets held.
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Refer to the information in Exercise 5-7. Ending inventory consists of 45 units from the March 14 purchase, 75 units from the July 30 purchase, and all 100 units from the October 26 purchase. Using the specific identification method, compute (a) the cost of goods sold and (b) the gross profit. (Round amounts to cents.)
Question: Part A
Santana Rey of Business Solutions is evaluating her inventory to determine whether it must be adjusted based on lower of cost or market rules. Business Solutions has three different types of software in its inventory, and the following information is available for each.
Inventory Item | Units | Cost Per unit | Market per unit |
Office Productivity | 3 | \(76 | \)74 |
Desktop publishing | 2 | 103 | 100 |
Accounting | 3 | 90 | 96 |
Required
1. Compute the lower of cost or market for ending inventory assuming Rey applies the lower of cost or market rule to inventory as a whole. Must Rey adjust the reported inventory value? Explain.
2. Assume that Rey had instead applied the lower cost or market rule to each product in inventory. Under this assumption, must Rey adjust the reported inventory value? Explain.
Does the accounting concept of consistency preclude any changes from one accounting method to another?
Seneca Co. began year 2017 with 6,500 units of product in its January 1 inventory costing \(35 each. It made successive purchases of its product in year 2017 as follows. The company uses a periodic inventory system. On December 31, 2017, a physical count reveals that 8,500 units of its product remain in inventory.
Jan 4 | 11,500 units @ \)33 each |
May 18 | 13,400 units @ \(32 each |
July 9 | 11,000 units @ \)29 each |
Nov 21 | 7,600 units @ $27 each |
Required
Compute the amounts assigned to the 2017 ending inventory and the cost of goods sold using (a) FIFO, (b) LIFO, and (c) weighted average. (Round all amounts to cents.)
Aloha Company uses a perpetual inventory system. It entered into the following calendar-year purchases and sales transactions. (For specific identification, the May 9 sale consisted of 80 units from beginning inventory and 100 units from the May 6 purchase; the May 30 sale consisted of 200 units from the May 6 purchase and 100 units from the May 25 purchase.)
Date | Activities | Units acquired at cost | Units sold at retail |
May 1 | Beginning inventory | 150 units @ \(300.00 per unit | |
May 6 | Purchase | 350 units @ \)350.00 per unit | |
May 9 | Sales | 180 units @ \(1,200.00 per unit | |
May 17 | Purchase | 80 units @ \)450.00 per unit | |
May 25 | Purchase | 100 units @ \(458.00 per unit | |
May 30 | Sales | 300 units @ \)1,400.00 per unit | |
680 units | 480 units |
Required
1. Compute cost of goods available for sale and the number of units available for sale.
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