8-14 Inventory cost flow methods; perpetual system
Marcus Comp uses a perpetual system. The
following transactions affected its merchandise inventory during t the month of
August 1 Inventory on hand -2,000 units;
cost $ 6.10 each
8- Purchased 10,000 units for $5.50
14- Sold 8,000 units for $12.00 each.
18- Purchased 6,000 units for $5.00 each.
25- Sold 7,000 units for $11.00 each.
31- Inventory on hand â€“ 3,000 units.
Determine the inventory balance Marcus
would report in its August 31,2011 balance sheet and the cost of goods sold it
would report in its August 2011 income statement using each of the following
cost flow methods:
First in, First-out (FIFO)
Last, in First â€“out (LIFO)
8-18 Supplemental LIFO disclosures; LIFO reserve;
MARYSTEEL INC. is the global leader in providing
furniture for office environment. The company uses the LIFO inventory method
for external reporting and for income tax purposes but maintain its internal
records using FIFO. The following disclosure note was included in a recent
($ in millions):
Raw material $61.3 $67.5
Work â€“in-process $15.9 $20.9
$ 129.9 $146.7
The companyâ€™s income statement reported
cost of goods sold of $2,236.7 million for the fiscal year ended February 27,
MARYSTEEL INC adjusts the LIFO
reserve at the end of its fiscal year. Prepare the February 27, 2009, adjusting
entry to make the cost of goods sold adjustment.
If MARYSTEEL INC had used FIFO
to value its inventories, what would cost of goods sold have been for the 2009
9-19 Dollar-Value LIFO retail
On January 1, 2011, The Granma Hat Company
adopted the dollar-value LIFO retail method. The following data are available
Net Purchases 112,500 255,000
Net markups 6,000
Net markdowns 11,000
Retail price index, 12/31/11 1.04
Calculate the estimated ending inventory
and cost of goods sold for 2011.
Lower of cost or market
Leaders Company has five products in its
inventory. Information about the December 31,2011, inventory follows.
Product Quantity Unit Cost Unit Replacement Cost Unit Selling Price
A 1,000 $10 $12 $16
B 800 15 11 18
C 600 3 2 8
D 200 7 4 6
E 600 14 12 13
The selling cost for each product consists
of a 15 percent sales commission. The normal profit percentage for each product
is 40 percent of the selling price.
1-Determine the balance sheet inventory
carrying value at December 31,2011 assuming the LCM rule is applied to
2-Determine the balance sheet inventory
carrying value at December 31, 2011, assuming the LCM rule is applied to the
entire inventory, Also, assuming that Leaders recognizes an inventory write
â€“down as a separate income statement item, determine the amount of the loss.