TRADITIONAL HOMEWORK ITEMS – SPRING 2024 – ACT 3391General Instructions for the Traditional Homework – refer to the instructions for traditional item no. 1.
24. (6 points) The following pertain to the cost of H’s only inventory item:
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Inventory on hand, January 1
Purchases, January 2
Purchases, January 12
Purchases, January 16
Purchase, January 20
Purchases, January 28
0 units
75 units @ $21 per unit
85 units @ $23 per unit
90 units @ $25 per unit
50 units @ $28 per unit
65 units @ $32 per unit
365
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Sales, January 5
Sales, January 10
Sales, January 15
Sales, January 19
Sales, January 25
40 units @ $55 per unit
30 units @ $55 per unit
50 units @ $55 per unit
85 units @ $55 per unit
55 units @ $55 per unit
260
(260 x $55 = $14,300)
Calculate COGS AND GP for January AND EI as of 01-31 under the following assumptions:
➢ H uses periodic LIFO
EI:
COGS:
Gross profit:
➢
H uses periodic FIFO
EI:
COGS:
Gross profit:
➢
H uses a weighted average method and rounds the unit cost to the nearest penny. H makes sure that exactly 100% of
its COGAS ends up either as EI or COGS.
EI:
COGS:
Gross profit:
➢ H uses perpetual LIFO
EI:
COGS:
Gross profit:
25. (5 points) Irene uses a calendar-year accounting period and a periodic inventory system. Assume Irene had the following
independent situations:
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Situation 1. Goods shipped to Irene by a vendor f.o.b. destination on 12-28-11 were in transit at 12-31-11. The goods cost
$15,000. On 01-04-12, Irene received the goods. On 12-31-11, Irene recorded a credit purchase of $15,000.
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Situation 2. Goods shipped to Irene by a vendor f.o.b. shipping point on 12-28-11 were in transit at 12-31-11. The goods cost
$40,000. On 01-03-12, Irene received the goods. On 01-03-12, Irene recorded a credit purchase of $40,000.
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Situation 3. Goods shipped by Irene to a customer f.o.b. shipping point on 12-29-11 were in transit at 12-31-11. The goods cost
$25,000. The customer received the goods on 01-04-12. On 01-04-12, Irene billed the customer and recorded a credit sale of
$60,000.
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Situation 4. Goods shipped by Irene to a customer f.o.b. destination on 12-29-11 were in transit at 12-31-11. The goods cost
$27,000. The customer received the goods on 01-15-12. On 01-15-12, Irene billed the customer and recorded a credit sale of
$65,000.
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Situation 5. On 12-31-11, Irene was in possession of $40,000 of goods that she was holding on a consignment basis. Irene
received these goods on 12-24-11. Upon receipt of these goods, Irene recorded a credit purchase of $40,000.
Assume Irene values the inventory reported on its balance sheet and the amount recorded as cost of goods sold on its income
statement on the basis of its physical inventory count that Irene performed on 12-31-11. Irene counts whatever is on its premises.
Individually discuss the effect (in dollars and direction, e.g., overstate, understate, no effect) that each of the above items has on:
➢ Irene’s sales revenue for the year ended 12-31-11
➢ Irene’s cost of goods sold for the year ended 12-31-11
➢ Irene’s accounts receivable as of 12-31-11
➢ Irene’s inventory as of 12-31-11
➢ Irene’s accounts payable as of 12-31-11
➢ Irene’s stockholders’ equity as of 12-31-11
Situation
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I’s sales for year
ended 12-31-11
I’s COGS for
year ended
12-31-11
I’s AR as of
12-31-11
I’s inventory as
of 12-31-11
I’s AP as of
12-31-11
I’s SE as of
12-31-11
Remember, each box above should have BOTH an effect AND a $ amount.
26. (4 points) Diane makes one product. Diana adopted the dollar-value LIFO inventory method on 12-31-20. Her ending inventory
at 12-31-20 was $250,000. Additional inventory data follows:
Year
2021
2022
2023
2024
2025
Inventory at
year-end prices
$252,960
$261,560
$263,550
$270,300
$261,600
Price index
(base year 2020)
1.02
1.04
1.05
1.06
1.09
Compute the inventory at December 31, 2021, 2022, 2023, 2024, and 2025 for each year assuming Diane uses the dollar-value LIFO
method for each year.
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