ACcounting HW – Inventory

Question 1

1.  

CH 8 – Inventory Errors (Points: 1)   Use the following information to answer the NEXT (4) questions: 

ABC, Inc. uses a periodic inventory system and reported $300,000 of inventory as of December 31, 2012.  Upon reviewing the company’s records, the auditor noted the following items which may have been recorded incorrectly regarding their inventory.
a)  Goods purchased costing $25,000 were shipped f.o.b. destination by a supplier on December 26 and were received on January 2. ABC received and recorded the invoice on December 29. The goods were not on hand for the physical count and therefore not included.
b)  Included in the physical count were goods shipped to a customer FOB Shipping point on December 31.  The goods had a cost of $12,000.  ABC recorded the sale on December 31 at 50% mark up on cost.  At the close of the business day on December 31, the shipment was still on ABC’s loading dock waiting to be picked up by the common carrier.
c)  ABC had goods out on consignment with a selling price of $20,000.  Mark up on cost for this type of merchandise is 25%.  No sales invoice was recorded; the goods were not included in the physical count because they were not in the warehouse.   

Required: 

1.  Determine the effect of these errors on ABC’s financial statements as of December 31, 2012. Use O for overstated, U for understated, or NE for No Effect.  If there is an effect, state the dollar amount.  State the over/understatement first, followed by the dollar amount.  Do not space between the O/U/NE and the dollar amount.   For example, if Assets are understated by $7,000, record your answer at U7000. 

Assets

Liabilities

Equity

  $_______

  $_________

   $__________

 

1.  Determine the effect on Assets as of December 31, 2012:  $ [BLANK_1]

2.

Answer

1 points   

Question 2

1.  

Using the information presented above, determine the effect on Liabilities as of December 31, 2012:  $[Blank_2]

Answer

0.5 points   

Question 3

1.  

Using the information presented in #1 above, determine the effect on Total Equity as of December 31, 2012:  $[Blank_3]

Answer
0.5 points   

Question 4

1.  

Using the information presented in #1 above, determine the CORRECT Ending Inventory balance as of December 31, 2012:  $[Blank_4]

Answer
0.5 points   

Question 5

1.  

CH 8 – DOLLAR VALUE LIFO (Points: 1)  Use the following information to answer the next (2) questions: 

Jackson Company adopted Dollar Value LIFO (DVL) on January 1, 2011 for its one inventory pool. The inventory’s value on this date was $500,000. The 2011, 2012 and 2013 ending inventory valued at year-end costs were $556,500, $596,200, and $604,900 respectively. The appropriate cost indexes are 1.05 for 2011, 1.10 for 2012 and 1.15 for 2013.
a. Determine the ending inventory value to be reported on Jackson’s balance sheet at December 31, 2013 using DVL. $ [Blank_1]
  

2. Answer

0.5 points   

Question 6

1.  

Using the information presented in #5 above, answer the following question:  

b.  If Purchases during 2013 were $1,150,000, determine COGS for the year ended December 31, 2013:

$ [Blank_2]

Answer
0.5 points   

Question 7

1.  

CH8-9-LCM.  USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT (3) QUESTIONS: 

The following information applies to inventory purchases and sales for the month of  May for ABC Company: 

Date

Transaction

Units @ $Cost/Selling Price

May 1

Beg. Inventory

3,500 units @ $10

May 3

Purchase

2,500 units @ $7.50

May 6

Sale

1,000 units @ $15

May 15

Purchase

5,000 units @ $8.00

May 20

Sale

5,500 units @ $15

May 29

Purchase

4,000 units @ $7.60

(a)  Determine Ending Inventory at cost using perpetual FIFO:  $ [BLANK_1]

 

2. Answer
0.5 points   

Question 8

1.  

Using the information presented above in #7, determine the following:

(b)  ABC currently uses US GAAP.  The current replacement cost as of May 31 is $65,900 for the same inventory.  The company estimates the selling price to be $85,000 while the cost to sell is $18,000 and the normal profit margin is $7,000.  What balance should be reported as ABC’s ending inventory as of May 31 under US GAAP?

$ [Blank_2]
Answer
0.5 points   

Question 9

1.  

Using the information presented in #7 above, determine the following:

(c)  ABC is considering adopting IFRS reporting standards.  Using the same data as above, what balance should be reported for the company’s ending inventory account as of May 31 under IFRS?  $ [Blank_3]

Answer
0.5 points   

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