ACCT 211 Homework 5 Inventories and Cost of Sales Problems Assignment solutions complete answers

ACCT 211 Homework 5 Inventories and Cost of Sales Problems Assignment solutions complete answers 

 

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Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.
 

Date
Activities
Units Acquired at Cost
Units Sold at Retail
March 1
Beginning inventory
130
units
@ $51.60 per unit
 
 
 
March 5
Purchase
240
units
@ $56.60 per unit
 
 
 
March 9
Sales
 
 
 
290
units
@ $86.60 per unit
March 18
Purchase
100
units
@ $61.60 per unit
 
 
 
March 25
Purchase
180
units
@ $63.60 per unit
 
 
 
March 29
Sales
 
 
 
160
units
@ $96.60 per unit
 
Totals
650
units
 
450
units
 
rev: 05_06_2021_QC_CS-263278

Required:
1. Compute cost of goods available for sale and the number of units available for sale.

2. Compute the number of units in ending inventory.

3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification, units sold include 80 units from beginning inventory, 210 units from the March 5 purchase, 60 units from the March 18 purchase, and 100 units from the March 25 purchase.

4. Compute gross profit earned by the company for each of the four costing methods. For specific identification, units sold include 80 units from beginning inventory, 210 units from the March 5 purchase, 60 units from the March 18 purchase, and 100 units from the March 25 purchase. (Round weighted average cost per unit to two decimals and final answers to nearest whole dollar.)

 

Montoure Company uses a perpetual inventory system. It entered into the following calendar-year purchases and sales transactions.
 

Date
Activities
Units Acquired at Cost
Units Sold at Retail
January 1
Beginning inventory
600
units
@ $60 per unit
 
 
 
February 10
Purchase
400
units
@ $57 per unit
 
 
 
March 13
Purchase
150
units
@ $45 per unit
 
 
 
March 15
Sales
 
 
 
750
units
@ $85 per unit
August 21
Purchase
150
units
@ $65 per unit
 
 
 
September 5
Purchase
450
units
@ $61 per unit
 
 
 
September 10
Sales
 
 
 
600
units
@ $85 per unit
 
Totals
1,750
units
 
1,350
units
 

Required:
1. Compute cost of goods available for sale and the number of units available for sale.

2. Compute the number of units in ending inventory.

3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. (For specific identification, units sold consist of 600 units from beginning inventory, 300 from the February 10 purchase, 150 from the March 13 purchase, 100 from the August 21 purchase, and 200 from the September 5 purchase.)

4. Compute gross profit earned by the company for each of the four costing methods. (Round your average cost per unit to 2 decimal places.)

5. The company’s manager earns a bonus based on a percent of gross profit. Which method of inventory costing produces the highest bonus for the manager?

 

A physical inventory of Liverpool Company taken at December 31 reveals the following.
 

Item
Units
Per Unit
Cost
Market
Car audio equipment
 
 
 
Speakers
339
$ 94
$ 102
Stereos
254
115
104
Amplifiers
320
90
99
Subwoofers
198
56
45
Security equipment
 
 
 
Alarms
474
154
129
Locks
285
97
88
Cameras
206
314
326
Binocular equipment
 
 
 
Tripods
179
74
88
Stabilizers
164
101
109
 
Required:
1. Compute the lower of cost or market for the inventory applied separately to each item.
2. If the market amount is less than the recorded cost of the inventory, then record the LCM adjustment to the Merchandise Inventory account.

 

Navajo Company’s year-end financial statements show the following. The company recently discovered that in making physical counts of inventory, it had made the following errors: Year 1 ending inventory is understated by $64,000 and Year 2 ending inventory is overstated by $34,000.
 

For Year Ended December 31
Year 1
Year 2
Year 3
(a) Cost of goods sold
$ 739,000
$ 969,000
$ 804,000
(b) Net income
282,000
289,000
264,000
(c) Total current assets
1,261,000
1,374,000
1,244,000
(d) Total equity
1,401,000
1,594,000
1,259,000

Required:
1. For each key financial statement figure—(a), (b), (c), and (d) above—prepare a table to show the adjustments necessary to correct the reported amounts.
2. What is the total error in combined net income for the three-year period resulting from the inventory errors?