Chapter 9: Inventories: Additional Valuation Issues

Use the information for Kemper Company from BE9-7. In 2018, Kemper paid $1,000,000toobtaintherawmaterialswhichwereworth$950,000. Prepare the entry to record the purchase

Fosbre Corporation’s April 30 inventory was destroyed by fire. January 1 inventory was $150,000,andpurchasesforJanuarythroughApriltotaled$500,000. Sales revenue for the same period was $700,000. Fosbre’s normal gross profit percentage is 35% on sales. Using the gross profit method, estimate Fosbre’s April 30 inventory that was destroyed by fire.

Presented below is information related to Ricky Henderson Company. Cost Retail Beginning inventory $200,000$ 280,000 Purchases 1,375,000 2,140,000 Markups 95,000 Markup cancellations 15,000 Markdowns 35,000 Markdown cancellations 5,000 Sales revenue 2,200,000 Instructions Compute the inventory by the conventional retail inventory method.

The records of Ellen’s Boutique report the following data for the month of April. Sales revenue $99,000Purchases(atcost)$48,000 Sales returns 2,000 Purchases (at sales price) 88,000 Markups 10,000 Purchase returns (at cost) 2,000 Markup cancellations 1,500 Purchase returns (at sales price) 3,000 Markdowns 9,300 Beginning inventory (at cost) 30,000 Markdown cancellations 2,800 Beginning inventory (at sales price) 46,500 Freight on purchases 2,400 Instructions Compute the ending inventory by the conventional retail inventory method

The financial statements of ConAgra Foods, Inc.’s 2014 annual report disclose the following information. (in millions) 2014 2013 2012 Year-end inventories $2,201$2,077 $2,341FiscalYear20142013Netsales$17,703 $15,427 Cost of goods sold 13,980 11,864 Net income 315 786Instructions Compute ConAgra’s (a) inventory turnover and (b) the average days to sell inventory for 2014 and 2013.

Keller Company began operations on January 1, 2016, adopting the conventional retail inventory system. None of the company’s merchandise was marked down in 2016 and, because there was no beginning inventory, its ending inventory for 2016 of $38,100wouldhavebeenthesameundereithertheconventionalretailsystemortheLIFOretailsystem.OnDecember31,2017,thestoremanagementconsidersadoptingtheLIFOretailsystemanddesirestoknowhowtheDecember31,2017,inventorywouldappearunderbothsystems.Allpertinentdataregardingpurchases,sales,markups,andmarkdownsareshownbelow.Therehasbeennochangeinthepricelevel.CostRetailInventory,Jan.1,2017$ 38,100 $ 60,000 Markdowns (net) 13,000 Markups (net) 22,000 Purchases (net) 130,900 178,000 Sales (net) 167,000 Instructions Determine the cost of the 2017 ending inventory under both (a) the conventional retail method and (b) the LIFO retail method

Retail Inventory Method—Conventional and LIFO) Leonard Company began operations late in 2016 and adopted the conventional retail inventory method. Because there was no beginning inventory for 2016 and no markdowns during 2016, the ending inventory for 2016 was $14,000underboththeconventionalretailmethodandtheLIFOretailmethod.Attheendof2017,managementwantstocomparetheresultsofapplyingtheconventionalandLIFOretailmethods.Therewasnochangeinthepricelevelduring2017.Thefollowingdataareavailableforcomputations.CostRetailInventory,January1,2017$14,000 $20,000 Sales revenue 80,000 Net markups 9,000 Net markdowns 1,600 Purchases 58,800 81,000 Freight-in 7,500 Estimated theft 2,000 Instructions Compute the cost of the 2017 ending inventory under both (a) the conventional retail method and (b) the LIFO retail method

You assemble the following information for Seneca Department Store, which computes its inventory under the dollar-value LIFO method. Cost Retail Inventory on January 1, 2017 $216,000$300,000 Purchases 364,800 480,000 Increase in price level for year 9% Instructions Compute the cost of the inventory on December 31, 2017, assuming that the inventory at retail is (a) $294,300and(b)$365,150.

Presented below is information related to Langston Hughes Corporation. Price LIFO Index Cost Retail Inventory on December 31, 2017, when dollar-value LIFO is adopted 100 $36,000$ 74,500 Inventory, December 31, 2018 110 ? 100,100 Instructions Compute the ending inventory under the dollar-value LIFO method at December 31, 2018. The cost-to-retail ratio for 2018 was 60%.

(Dollar-Value LIFO Retail) You assemble the following information for Seneca Department Store, which computes its inventory under the dollar-value LIFO method. Cost Retail Inventory on January 1, 2017 $216,000$300,000 Purchases 364,800 480,000 Increase in price level for year 9% Instructions Compute the cost of the inventory on December 31, 2017, assuming that the inventory at retail is (a) $294,300and(b)$365,150.