A140/ACG1022 Section 14 Financial Accounting I – Winter 2013 Module 9

assignment_mod_09.xlsx

Whitewater Co. lost its entire inventory in a flash flood that occurred on August 31, 20##. Review the recovered records for August in the 

Excel Template

.

Requirements:

1. Estimate the August 31 inventory using the gross profit method.
2. Prepare the August income statement through gross profit for Whitewater Co.
3. Calculate the Inventory Turnover Ratio for Whitewater for years 2009 and 2010.
4. Provide a reason why the Inventory Turnover has changed from the previous year.

2

>M9 Assignment

1

,600

1

2

Module 9 Assignment 1:

Whitewater Co. lost its entire inventory in a flash flood that occurred on August 31, 20##.

Over the past 4 years gross profit has averaged 32% of net sales. The following records for August were recovered:

Beginning Inventory

$38

Net Purchases

$341,900

Sales

$530,400

Sales returns and allownaces

$12,300

Sales discounts

$6,500

Requirements:

Estimate the August 31 inventory using the gross profit method.

Prepare the August income statement through gross profit for Whitewater Co.

Income Statement

M9 Assignment 2

and

.

2010 2009

$38

22

Requirements:

1

2010

=

2009

=

2

Module 9 Assignment 2:
P.F. Johnson has the following information for the years ending December 31,		2009		2010
Sales Revenue	$242	$239
Cost of Goods Sold:
Beginning Inventory	$	22
Net Purchases	152	144
Goods Available for Sale	$174	$182
Ending Inventory	13
Cost of Goods Sold	161	160
Gross Profit	$81	$79
Operating Expenses	55	54
Net Income	$26	$25
Compute the inventory turnover rate for P.F. Johnson for 2009 and 2010. Round to two decimal places.
Inventory turnover		=
Inventory turnover =
What is the likely cause of the change in turnover rate from 2009 to 2010?