ACCT 301 Connect Homework Chapter 9 solutions complete answers

ACCT 301 Connect Homework Chapter 9 solutions complete answers 

 

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Question 1

 

Ross Electronics has one product in its ending inventory. Per unit data consist of the following: cost, $39; selling price, $44; selling costs, $3.

 

What unit value should Ross use when applying the lower of cost or net realizable value rule to ending inventory?

 

Question 2

 

Ross Electronics has one product in its ending inventory. Per unit data consist of the following: cost, $34; replacement cost, $32; selling price, $44; selling costs, $4. The normal profit is 30% of selling price.

 

What unit value should Ross use when applying the lower of cost or market (LCM) rule to ending inventory?

 

Question 3

 

In 2021, Hopyard Lumber changed its inventory method from LIFO to FIFO. Inventory at the end of 2020 of $130,000 would have been $142,000 if FIFO had been used. Inventory at the end of 2021 is $160,000 using the new FIFO method but would have been $150,000 if the company had continued to use LIFO.

 

What is the effect of the change on 2021 cost of goods sold?

 

Question 4

 

Herman Company has three products in its ending inventory. Specific per unit data at the end of the year for each of the products are as follows:

 

What unit values should Herman use for each of its products when applying the lower of cost or net realizable value (LCNRV) rule to ending inventory?

 

Question 5

 

The inventory of Royal Decking consisted of five products. Information about the December 31, 2021, inventory is as follows:

 

Selling costs consist of a sales commission equal to 10% of selling price and shipping costs equal to 5% of cost. The normal profit is 20% of selling price.

 

What unit value should Royal Decking use for each of its products when applying the lower of cost or market (LCM) rule to units of ending inventory? (Do not round intermediate calculations. Round final answers to 2 decimal places.)

 

Question 6

 

Royal Gorge Company uses the gross profit method to estimate ending inventory and cost of goods sold when preparing monthly financial statements required by its bank. Inventory on hand at the end of October was $60,200. The following information for the month of November was available from company records:

 

In addition, the controller is aware of $8,000 of inventory that was stolen during November from one of the company's warehouses.

 

1. Calculate the estimated inventory at the end of November, assuming a gross profit ratio of 40%.

 

2. Calculate the estimated inventory at the end of November, assuming a markup on cost of 60%.

 

Question 7

 

In 2021, CPS Company changed its method of valuing inventory from the FIFO method to the average cost method. At December 31, 2020, CPS’s inventories were $44 million (FIFO). CPS’s records indicated that the inventories would have totaled $33.4 million at December 31, 2020, if determined on an average cost basis.

 

1. Prepare the journal entry to record the adjustment. (Ignore income taxes.) (Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5). If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

 

Question 8

 

Almaden Hardware Store sells two product categories, tools and paint products. Information pertaining to its 2021 year-end inventory is as follows:

 

1. Determine the carrying value of inventory at year-end, assuming the lower of cost or net realizable value (LCNRV) rule is applied to (a) individual products, (b) product categories, and (c) total inventory.

 

2. Assuming inventory write-downs are common for Almaden, record any necessary year-end adjustment amount for each of the LCNRV applications in requirement 1.

 

Question 9

 

Forester Company has five products in its inventory. Information about the December 31, 2021, inventory follows.

 

The cost to sell for each product consists of a 20 percent sales commission. The normal profit for each product is 40 percent of the selling price.

 

1. Determine the carrying value of inventory at December 31, 2021, assuming the lower of cost or market (LCM) rule is applied to individual products.

 

2. Determine the carrying value of inventory at December 31, 2021, assuming the LCM rule is applied to the entire inventory.

 

3. Assuming inventory write-downs are common for Forester, record any necessary year-end adjusting entry based on the amount calculated in requirement 2.

 

Question 10

 

Smith-Kline Company maintains inventory records at selling prices as well as at cost. For 2021, the records indicate the following data:

 

Assuming the price level increased from 1.00 at January 1 to 1.75 at December 31, 2021, use the dollar-value LIFO retail method to approximate cost of ending inventory and cost of goods sold. (Do not round intermediate calculations. Round final answers to the nearest whole dollar. Enter your answers in thousands.)