This information is available for Abdullah's Photo Corporation for 2017, 2018, and 2019.
Instructions
Calculate inventory turnover, days in inventory, and gross profit rate for Abdullah's Photo corporation for 2018, 2019, and 2020. Comment on any trends.
Moath Company reports the following for the month of June.
Instructions
- Compute the cost of ending inventory and the cost of goods sold under (1) FIFO and (2) LIFO.
- Which costing method gives the higher ending inventory?. Why?
- Which method results in the higher cost of goods sold?. Why?
Shawn Company had 100 units in beginning inventory at a total cost of $10,000. The company purchased 200 units at a total cost of $26,000. At the end of the year, Shawn had 75 units in ending inventory.
Instructions
- Compute the cost of ending inventory and the cost of goods sold under (1) FIFO, (2) LIFO and (3) average-cost.
- Which costing method gives the higher ending inventory?. Why?
- Which method results in the higher cost of goods sold?. Why?
Inventory data for Moath Company are presented below.
Instructions
- Compute the cost of ending inventory and the cost of goods sold using average-cost method.
- Will the results in (a) be higher or lower than the results under (1) FIFO and (2) LIFO.
- Why the average unit cost not $6?
Elliott's Hardware reported cost of goods sold as follows.
Elliott's made two errors: (1) 2019 ending inventory was overstated $3,000, and (2) 2020 ending inventory was understated $5,000.
Instructions
Compute the correct cost of goods sold for each year.
Smart Watch Company reported the following income statement data for a 2-year period.
Smat uses a periodic inventory system. The inventories at January 1, 2019, and December 31, 2020, are correct. However, the ending inventory at December 31, 2019, was overstated $6,000.
Instructions
- Prepare correct income statement data for the 2 years.
- What is the cumulative effect of the inventory error on total gross profit for the 2 years?
Freeze Frame Camera Shop uses the lower-of-cost-or-market basis for its inventory. The following data are available at December 31.
Instructions
Determine the amount of the ending inventory by applying the lower-of-cost-or-market basis
Charapata Company applied FIFO to its inventory and got the following results for its ending inventory.
| Cameras | 100 units at a cost per unit of $65 |
| Blu-ray players | 150 units at a cost per unit of $75 |
| iPods | 125 units at a cost per unit of $80 |
The cost of purchasing units at year-end was cameras $71, Blu-ray players $67, and iPods $78.
Instructions
Determine the amount of the ending inventory at lower-of-cost-or-market
The inventory of Hang company was destroyed by fire on March 1. From an examination of the accounting records, the following data for the first 2 months of the year are obtained. Sales Revenue $51,000, Sale Returns and Allowances $1,000, purchases $31,200. Freight-In $1,200, and purchase Returns and Allowances $1,400.
Instructions
Determine the merchandise lost by fire, assuming.
- A beginning inventory of $20,000 and a gross profit rate of 30% on net sales.
- A beginning inventory of $30,000 and a gross profit rate of 40% on net sales.
Shereen company report the following information for November and December 2019.
| November | December | |
| Cost of goods purchased | $536,000 | $610,000 |
| Inventory, beginning of month | 130,000 | 120,000 |
| Inventory, end of month | 120,000 | ? |
| Sales revenue | 840,000 | 1,000,000 |
Shereen's ending inventory at December 31 was destroyed in a fire
Instructions
- Compute the gross profit rate for November.
- Using the gross profit rate for November, determine the estimated cost of inventory lost in the fire