Financial Accounting Questions and Answers

Beginning inventory, purchases, and sales for Item CSW15 are as follows:    Mar. 1 Inventory 100 units at $15 7 Sale         88 units 15 Purchase 125 units at $18 24 Sale         75 units Assuming a perpetual inventory system and using the first-in, first-out (FIFO) method, determine (a) the cost of merchandise sold on March 24 and (b) the inventory on March 31. Answer: a. Cost of merchandise sold (March 24): 12 units @ $15 $   180 63 units @ $18   1,134 75                   $1,314 b. Inventory, March 31: $1,116 = 62 units × $18

Beginning inventory, purchases, and sales for Item B901 are as follows:    Aug. 1 Inventory 50 units at $80 9 Sale         30 units 13 Purchase  40 units at $85 28 Sale         25 units Assuming a perpetual inventory system and using the first-in, first-out (FIFO) method, determine (a) the cost of merchandise sold on August 28 and (b) the inventory on August 31. Answer: a. Cost of merchandise sold (August 28): 20 units @ $80 $1,600   5 units @ $85       425 25                   $2,025 b. Inventory, August 31: $2,975 = 35 units × $85

Three identical units of Item K113 are purchased during July, as shown below. Item JC07 Units Cost July 9 Purchase  1 $160      17 Purchase  1 168      26 Purchase  1 176      Total  3 $504      Average cost per unit $168 ($504 ÷ 3 units) Assume that one unit is sold on July 31 for $225. Determine the gross profit for July and ending inventory on July 31 using the (a) first-in, first-out (FIFO); (b) last-in, first-out (LIFO); and (c) average cost methods. Answer:                    Gross Profit   Ending Inventory                   July   July 31   a. First-in, first-out (FIFO) $65 ($225 – $160) $344 ($168 + $176) b. Last-in, first-out (LIFO) $49 ($225 – $176) $328 ($160 + $168) c. Average cost           $57 ($225 ...

Three identical units of Item ZE9 are purchased during April, as shown below. Item WH4        Units       Cost Apr. 2 Purchase 1 $10      12 Purchase 1              12      23 Purchase 1              14      Total 3 $36      Average cost per unit $12 ($36 ÷ 3 units) Assume that one unit is sold on April 27 for $29. Determine the gross profit for April and ending inventory on April 30 using the (a) first-in, first-out (FIFO); (b) last-in, first-out (LIFO); and (c) average cost methods. Answer:                                           Gross Profit   Ending Inventory                          ...

Selected data on merchandise inventory, purchases, and sales for Segal Co. and Iroquois Co. are as follows: Cost Retail Segal Co. Merchandise inventory, March 1 $ 298,000 $ 375,000 Transactions during March: Purchases (net) 4,850,000 6,225,000 Sales 6,320,000 Sales returns and allowances 245,000 Iroquois Co. Merchandise inventory, January 1 $ 300,000 Transactions during January thru March: Purchases (net) 4,150,000 Sales 6,900,000 Sales returns and allowances 175,000 Estimated gross profi t rate 40% Instructions 1. Determine the estimated cost of the merchandise inventory of Segal Co. on March 31 by the retail method, presenting details of the computations. 2.  a. Estimate the cost of the merchandise inventory of Iroquois Co. on March 31 by the gross profit method, presenting details of the computations.  b. Assume that Iroquois Co. took a physical inventory on March 31 and discovered that $396,500 of merchandise was on hand. What was the estimated loss of inventory due to the...

Artic Appliances uses the periodic inventory system. Details regarding the inventory of appliances at January 1, 2012, purchases invoices during the year, and the inventory count at December 31, 2012, are summarized as follows: Purchases Invoices Model Inventory, January 1 1st 2nd 3rd Inventory Count, December 31 AK82 3 at $520 3 at $527 3 at $530 3 at $535 5 CO62 9 at 213 7 at 215 6 at 222 6 at 225 12 DE03 5 at 60 3 at 65 1 at 65 1 at 70 2 FL12 6 at 305 3 at 310 3 at 316 4 at 317 4 ME09 6 at 520 8 at 531 4 at 549 6 at 542 7 NM57 — 4 at 222 4 at 232 — 2 TN33 4 at 35 6 at 36 8 at 37 7 at 39 5 Instructions 1. Determine the cost of the inventory on December 31, 2012, by the first-in, first-out method. Present data in columnar form, using the following headings:  Model             Quantity                    Unit Cost                 Total Cost If the inventory of a p...

The beginning inventory for Francesca Co and data on purchases and sales for a threemonth period are shown in Problem 7-1B. Instructions 1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 4, using the last-in, first-out method. 2. Determine the total sales, the total cost of merchandise sold, and the gross profit from sales for the period. 3. Determine the ending inventory cost. Answer: 1.  Purchases Cost of Merchandise Sold Inventory   Date   Quantity  Unit Cost  Total Cost   Quantity  Unit Cost  Total Cost   Quantity  Unit Cost  Total Cost July 3        75 1,500 112,500  8  150  1,800  270,000     75  150 1,500 1,800 112,500 270,000  11    90 1,800162,000 75  60 1,500 1,800 112,500 108,000  30    45  1,80081,000 75  15 1,500 1,800 112,500 27...

The beginning inventory of merchandise at Francesca Co. and data on purchases and sales for a three-month period are as follows: Date Transaction Number of Units Per Unit Total July 3 Inventory 75 $1,500 $112,500  8 Purchase 150 1,800 270,000  11 Sale 90 3,000 270,000  30 Sale 45 3,000 135,000 Aug. 8 Purchase 125 2,000 250,000  10 Sale 110 3,000 330,000  19 Sale 80 3,000 240,000  28 Purchase 100 2,200 220,000 Sept. 5 Sale 60 3,500 210,000  16 Sale 50 3,500 175,000  21 Purchase 180 2,400 432,000  28 Sale 90 3,500 315,000 Instructions 1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3, using the first-in, first-out method. 2. Determine the total sales and the total cost of merchandise sold for the period. Journalize the entries in the sales and cost of merchandise sold accounts. Assume that all sales were on account. 3. Determine the gross profit from...

Selected data on merchandise inventory, purchases, and sales for Myrina Co. and Lemnos Co. are as follows:                                                                      Cost                 Retail Myrina Co. Merchandise inventory, May 1                $ 130,000        $ 185,000 Transactions during May: Purchases (net)                                        1,382,000         1,975,000 Sales                                                           ...

Data on the physical inventory of Rhino Company as of December 31, 2012, are presented in the working papers. The quantity of each commodity on hand has been determined and recorded on the inventory sheet. Unit market prices have also been determined as of December 31 and recorded on the sheet. The inventory is to be determined at cost and also at the lower of cost or market, using the first-in, first-out method. Quantity and cost data from the last purchases invoice of the year and the next-to-the-last purchases invoice are summarized as follows: Last Purchases Invoice Next-to-the-Last Purchases Invoice Description Quantity Purchased Unit Cost Quantity Purchased Unit Cost Alpha 30 $ 60 30 $ 59 Beta 35 175 20 180 Charlie 20 130 25 129 Echo 130 24 100 25 Frank 10 565 10 560 George 100 15 100 14 Killo 10 385 5 384 Quebec 500 8 500 7 Romeo 80 22 50 21 Sierra 5 250 4 260 Whiskey 100 21 100 19 X-Ray 10 750 9 745 Instructions Record the appropriate unit costs on the inventory sheet, and comp...

Bulldog Appliances uses the periodic inventory system. Details regarding the inventory of appliances at September 1, 2011, purchases invoices during the next 12 months, and the inventory count at August 31, 2012, are summarized as follows:                                                           Purchases Invoices Model    Inventory,September 1            1st            2nd            3rd       Inventory Count, August 31 AZ09                 __                             4 at $ 32   4 at $ 35     4 at $ 38                     5 GA85       ...

The beginning inventory at Keats Office Supplies and data on purchases and sales for a three-month period are shown in Problem 7-1A. Instructions 1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 4, using the last-in, first-out method. 2. Determine the total sales, the total cost of merchandise sold, and the gross profit from sales for the period. 3. Determine the ending inventory cost. Answer:   Purchases Cost of Merchandise Sold Inventory   Date   Quantity  Unit Cost  Total Cost   Quantity  Unit Cost  Total Cost   Quantity  Unit Cost  Total Cost Mar. 1        300  20 6,000 10  500  21  10,500     300  500  20  21 6,000 10,500 28     400  21  8,400  300  100  20  21 6,000 2,100 30     100  150  21  20  2,10...

The beginning inventory at Keats Office Supplies and data on purchases and sales for a three-month period are as follows: Date           Transaction         Numberof Units       Per Unit          Total Mar. 1          Inventory                 300                        $20            $ 6,000       10           Purchase                  500                          21             10,500       28           Sale                         400           ...

Data on the physical inventory of Chiron Co. as of December 31, 2012, are presented in the working papers. The quantity of each commodity on hand has been determined and recorded on the inventory sheet. Unit market prices have also been determined as of December 31 and recorded on the sheet. The inventory is to be determined at cost and also at the lower of cost or market, using the first-in, first-out method. Quantity and cost data from the last purchases invoice of the year and the next-to-the-last purchases invoice are summarized as follows: Last Purchases Invoice Next-to-the-Last Purchases Invoice Description Quantity Purchased Unit Cost Quantity Purchased Unit Cost Alpha 30 $ 60 40 $ 59 Beta 25 170 15 180 Charlie 20 130 15 128 Echo 150 25 100 27 Frank 6 550 15 540 George 90 16 100 15 Killo 8 395 4 394 Quebec 500 6 500 7 Romeo 75 25 80 26 Sierra 5 250 4 260 Whiskey 100 17 115 16 X-Ray 10 750 8 740 Instructions Record the appropriate unit costs on the inventory sheet, and complete t...

Based on the following data, estimate the cost of ending merchandise inventory: Sales (net)                                         $2,080,000 Estimated gross profit rate                          37% Beginning merchandise inventory       $ 75,000 Purchases (net)                                   1,325,000 Merchandise available for sale        $1,400,000 Answer: Merchandise available for sale .......................................................... $1,400,000 Less cost of merchandise sold [$2,080,000 × (100% – 37%)]..........   1,310,400 Estimated ending merchandise inventory........................................       $ 89,600

Based on the following data, estimate the cost of ending merchandise inventory: Sales (net)                                                $5,260,000 Estimated gross profit rate                                 40% Beginning merchandise inventory            $ 180,000 Purchases (net)                                          3,200,000 Merchandise available for sale                $3,380,000 Answer: Merchandise available for sale .......................................................... $3,380,000 Less cost of merchandise sold [$5,260,000 × (100% – 40%)]..........   3,156,000 Estimated ending merchandise inventory......

The merchandise inventory was destroyed by fire on December 13. The following data were obtained from the accounting records: Jan. 1                   Merchandise inventory             $ 500,000 Jan. 1–Dec. 13     Purchases (net)                         4,280,000                              Sales (net)                                6,500,000                              Estimated gross profit rate       36% a. Estimate the cost of the merchandise destroyed. b. Briefly describe the situations in which the gross profit method is useful. Answer: a.  A B C 1   Cost 2 Merchandise inventory, Januar...

On the basis of the following data, estimate the cost of the merchandise inventory at November 30 by the retail method:                                                                            Cost               Retail November 1 Merchandise inventory             $ 300,000      $ 400,000 November 1–30 Purchases (net)                   2,100,000       2,800,000 November 1–30 Sales (net)                                                  2,750,000 Answer:  A B C 1  Cost Retail 2 Merchandise inventory, November 1  $   300,0...

A business using the retail method of inventory costing determines that merchandise inventory at retail is $900,000. If the ratio of cost to retail price is 72%, what is the amount of inventory to be reported on the financial statements? Answer: $648,000 ($900,000 × 72%)

A business using the retail method of inventory costing determines that merchandise inventory at retail is $780,000. If the ratio of cost to retail price is 65%, what is the amount of inventory to be reported on the financial statements? Answer: $507,000 ($780,000 × 65%)