1- 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 2011:
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 $11.00 each.
31- Inventory on hand - 3,000 units.
Required:
Determine the inventory balance Marcus would report in its August 31,2011 balance sheet and the cost of goods sold it would report in its August 2011 income statement using each of the following cost flow methods:
1. First in, First-out (FIFO)
2. Last, in First -out (LIFO)
3. Average Cost.
2-Supplemental LIFO disclosures; LIFO reserve;
MARYSTEEL INC. is the global leader in providing furniture for office environment. The company uses the LIFO inventory method for external reporting and for income tax purposes but maintain its internal records using FIFO. The following disclosure note was included in a recent annual report:
5. Inventories ($ in millions):
February 27,2009 February 29,2008
Raw material $61.3 $67.5
Work -in-process $15.9 $20.9
Finished goods $79.9 $87.9
157.1 176.3
LIFO reserve (27.2) (29.6)
$ 129.9 $146.7
The company's income statement reported cost of goods sold of $2,236.7 million for the fiscal year ended February 27, 2009.
Required:
1. 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.
2. If MARYSTEEL INC had used FIFO to value its inventories, what would cost of goods sold have been for the 2009 fiscal year?
3- Dollar-Value LIFO retail
On January 1, 2011, The Granma Hat Company adopted the dollar-value LIFO retail method. The following data are available for 2011:
Cost Retail
Beginning inventory $71,280 $132,000
Net Purchases 112,500 255,000
Net markups 6,000
Net markdowns 11,000
Net Sales 232,000
Retail price index, 12/31/11 1.04
Required:
Calculate the estimated ending inventory and cost of goods sold for 2011.
4- 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.
Required:
1-Determine the balance sheet inventory carrying value at December 31,2011 assuming the LCM rule is applied to individual products.
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 -down as a separate income statement item, determine the amount of the loss.