Grand Canyon ACC370 WEEK 6 Assignment

Grand Canyon ACC370 WEEK 6 Assignment

E8-3 (Inventoriable Costs) Assume that in an annual audit of Harlowe Inc. at December 31, 2014, you find the following transactions near the closing date.
1. A special machine, fabricated to order for a customer, was finished and specifically segregated in the back part of the shipping room on December 31, 2014. The customer was billed on that date and the machine excluded from inventory although it was shipped on January 4, 2015.
2. Merchandise costing $2,800 was received on January 3, 2015, and the related purchase invoice recorded January 5. The invoice showed the shipment was made on December 29, 2014, f.o.b. destination.
3. A packing case containing a product costing $3,400 was standing in the shipping room when the physical inventory was taken. It was not included in the inventory because it was marked “Hold for shipping instructions.” Your investigation revealed that the customer’s order was dated December 18, 2014, but that the case was shipped and the customer billed on January 10, 2015. The product was a stock item of your client.
4. Merchandise received on January 6, 2015, costing $680 was entered in the purchase journal on
January 7, 2015. The invoice showed shipment was made f.o.b. supplier’s warehouse on December 31, 2014. Because it was not on hand at December 31, it was not included in inventory.
5. Merchandise costing $720 was received on December 28, 2014, and the invoice was not recorded. You located it in the hands of the purchasing agent; it was marked “on consignment.”

Instructions
Assuming that each of the amounts is material, state whether the merchandise should be included in the client’s inventory, and give your reason for your decision on each item.

P8-6 (Compute FIFO, LIFO, Average-Cost—Periodic and Perpetual) Ehlo Company is a multiproduct firm. Presented below is information concerning one of its products, the Hawkeye.
Date Transaction Quantity Price/Cost
1/1 Beginning inventory 1,000 $12
2/4 Purchase 2,000 18
2/20 Sale 2,500 30
4/2 Purchase 3,000 23
11/4 Sale 2,200 33

Instructions
Compute cost of goods sold, assuming Ehlo uses:
(a) Periodic system, FIFO cost flow. (d) Perpetual system, LIFO cost flow.
(b) Perpetual system, FIFO cost flow. (e) Periodic system, weighted-average cost flow.
(c) Periodic system, LIFO cost flow. (f) Perpetual system, moving-average cost flow.

P8-8 (Dollar-Value LIFO) Norman’s Televisions produces television sets in three categories: portable,midsize, and flat-screen. On January 1, 2014, Norman adopted dollar-value LIFO and decided to use a single inventory pool. The company’s January 1 inventory consists of:
Category Quantity Cost per Unit Total Cost
Portable 6,000 $100 $ 600,000
Midsize 8,000 250 2,000,000
Flat-screen 3,000 400 1,200,000
17,000 $3,800,000

During 2014, the company had the following purchases and sales.

Quantity Quantity Selling Price
Category Purchased Cost per Unit Sold per Unit
Portable 15,000 $110 14,000 $150
Midsize 20,000 300 24,000 405
Flat-screen 10,000 500 6,000 600
45,000 44,000

Instructions
(Round to four decimals.)
(a) Compute ending inventory, cost of goods sold, and gross profit.
(b) Assume the company uses three inventory pools instead of one. Repeat instruction (a).

E9-3 (Lower-of-Cost-or-Market) Michael Bolton Company follows the practice of pricing its inventory at
the lower-of-cost-or-market, on an individual-item basis.


Item Quantity Cost Cost to Estimated Cost of Completion Normal
No. per Unit Replace Selling Price and Disposal Profit
1320 1,200 $3.20 $3.00 $4.50 $0.35 $1.25
1333 900 2.70 2.30 3.50 0.50 0.50
1426 800 4.50 3.70 5.00 0.40 1.00
1437 1,000 3.60 3.10 3.20 0.25 0.90
1510 700 2.25 2.00 3.25 0.80 0.60
1522 500 3.00 2.70 3.80 0.40 0.50
1573 3,000 1.80 1.60 2.50 0.75 0.50
1626 1,000 4.70 5.20 6.00 0.50 1.00
1 2
Instructions
From the information above, determine the amount of Bolton Company inventory.


E9-17 (Gross Profit Method) Presented below is information related to Aaron Rodgers Corporation for
the current year.
5
Beginning inventory $ 600,000
Purchases 1,500,000
Total goods available for sale $2,100,000
Sales revenue 2,500,000

Instructions
Compute the ending inventory, assuming that (a) gross profit is 45% of sales; (b) gross profit is 60% of cost;
gross profit is 35% of sales; and (d) gross profit is 25% of cost.



P9-7 (Retail Inventory Method) Presented below is information related to Waveland Inc.

Cost Retail
Inventory, 12/31/14 $250,000 $ 390,000
Purchases 914,500 1,460,000
Purchase returns 60,000 80,000
Purchase discounts 18,000 —
Gross sales revenue (after employee discounts) — 1,410,000
Sales returns — 97,500
Markups — 120,000
Markup cancellations — 40,000
Markdowns — 45,000
Markdown cancellations — 20,000
Freight-in 42,000 —
Employee discounts granted — 8,000
Loss from breakage (normal) — 4,500

Instructions
Assuming that Waveland Inc. uses the conventional retail inventory method, compute the cost of its ending
inventory at December 31, 2015.