Chapter 5: Q1E_1. (page 262)
At year-end, Harris Co. had shipped \(12,500 of merchandise FOB destination to Harlow Co. Which company should include the \)12,500 of merchandise in transit as part of its year-end inventory?
Harris Co. will include the merchandise in transit in its year-end inventory.
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Does the accounting concept of consistency preclude any changes from one accounting method to another?
A car dealer acquires a used car for \(14,000, with terms FOB shipping point. Additional costs in obtaining and offering the car for sale include:
For computing inventory, what cost is assigned to the used car?
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
Analysis Component
5. If the company’s manager earns a bonus based on a percent of gross profit, which method of inventory costing will the manager likely prefer?
The records of Alaska Company provide the following information for the year ended December 31.
At Cost | At Retail | |
Jan 1 beginning inventory | \(469,010 | \)928,950 |
Cost of Goods purchased | 3,376,050 | 6,381,050 |
Sales | 5,595,800 | |
Sales return | 42,800 |
Required
A year-end physical inventory at retail prices yields a total inventory of $1,686,900. Prepare a calculation showing the company’s loss from shrinkage at cost and at retail.
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 weighted average method. (Round per unit costs and inventory amounts to cents.)
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