Current Assets Exercises IV

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Larry M Walther; Christopher J Skousen

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Larry M Walther & Christopher J Skousen

Current Assets Exercises IV

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Current Assets Exercises IV

1st edition

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ISBN 978-87-403-0458-9

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Contents

Contents

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Contents

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Problem 1

Problem 1

Jill Hansen owns Interior Designs, a furniture store One of her most popular items is a leather recliner.

Following is the recliner inventory activity for August he recliners on hand at August 1 had a unit cost

of $280.

a) If Interior Designs uses the irst-in, irst-out (FIFO) inventory method (periodic approach), what values would be assigned to ending inventory and cost of goods sold? How much is gross proit?

b) If Interior Designs uses the last-in, irst-out (LIFO) inventory method (periodic approach), what values would be assigned to ending inventory and cost of goods sold? How much is gross proit?

c) If Interior Designs uses the weighted-average inventory method (periodic approach),

what values would be assigned to ending inventory and cost of goods sold? How much is gross proit?

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Problem 1

Worksheet 1

(a) FIFO

-(b) LIFO

-(c) Weighted-average

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Problem 1

Solution 1

(a) FIFO

Plus: Purchases (120 X $300) + (180 X $340) 97,200

* Also, can be calculated as (80 X $280) + (120 X $300) +

(50 X $340) Sales (140 X $510) + (110 X $590) $ 136,300

(b) LIFO

Less: Ending inventory (80 X $280) + (50 x $300) 37,400

** Also, can be calculated as (180 X $340) + (70 X $300)

(c) Weighted-average

***Less: Ending inventory (130 X $314.74) 40,916

***Cost of goods sold (250 X $314.74) $ 78,684

*** Weighted-average cost is

$314.7368 (((80 X $280) + (120 X $300) + (180 X $340))/380)

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Problem 2

Problem 2

James Jenkins is conducting an audit of the computerized inventory system used by Clear Windows Corporation James has inserted hypothetical data into the computer program that tracks inventory on a perpetual basis Below are the hypotheical data inserted by James:

he computer program returned the following ending inventory values:

FIFO Perpetual, $864

LIFO Perpetual, $720

Moving average, $792

Which of the three values appears to be incorrect, and what “error” might be causing this condition?

Worksheet 2

FIFO PERPETUAL:

Day 1

15 X $33 = $495

Day 2

Day 3

24 X $36 = $864

Day 4

Ending

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Problem 2

LIFO PERPETUAL:

Day 1

15 X $33 = $495

Day 2

Day 3

24 X $36 = $864

Day 4

Ending

Moving Average:

Day 1

15 X $33 = $495

Day 2

Day 3

24 X $36 = $864

Day 4

Ending

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