Intermediate accounting by robles empleoch 4 answers

CHAPTER 4 INVENTORIES PROBLEMS 4-1 Crossings Company 4-2 Orient Trading Mark up on goods out on consignment 4.3 Tintin Company Merchandise in transit shipped FOB shipping point 31,500 M

CHAPTER 4 INVENTORIES PROBLEMS

4-1 (Crossings Company)

4-2 (Orient Trading)

Mark up on goods out on consignment

4.3 (Tintin Company)

Merchandise in transit shipped FOB shipping point 31,500 Merchandise sold FOB destination still in transit 12,500

4-4 (Jane, Inc.)

Adjustments:

No 2 item – Purchased FOB destination

still in transit but included in purchases ( 300)

No 4 item – Sold FOB destination still in transit but taken

as sale and excluded in inventory 500

4.5 (Centerpoint, Inc.)

Adjustments:

b Goods purchased in transit FOB shipping point 27,000

c Goods sold in transit FOB shipping point

included in inventory ( 85,000)

d Goods sold in transit FOB destination

not included in inventory 26,000

g Goods sold in transit FOB destination

not included in inventory 37,000

4.6 (Mega Company)

Cost of Ending

Inventory Cost of Goods

Sold

Gross Profit

Weighted

FIFO

Cost of ending inventory:

275 x 11.75 3,231.25

30 x 11.00 330.00

3,561.25

Cost of goods sold:

Cost of goods available for sale 8,056.25 Less ending inventory 3,561.25

4,495.00

Gross profit:

Sales 6,425.00

Less cost of goods sold 4,495.00

1,930.00

Weighted average

Cost of ending inventory:

Cost of goods available for sale 8,056.25

Number of units available for sale ÷

725 Weighted average cost per unit

11.11 Units in ending inventory x 305

3,388.55

Cost of goods sold:

Cost of goods available for sale 8,056.25 Less ending inventory 3,388.55

4,667.70

Gross profit:

Sales 6,425.00 Less cost of goods sold

Moving average

Cost of ending inventory:

Inventory, January

Purchase, March 7 200 x 11.00 = 2,200.00

Sale, May 20 (120 x 10.72 = 1,286.40) Sale, June 30 ( 55 x 10.72 = 589.60)

Purchase, July 15 275 x 11.75 = 3,231.25

Total 550 x 11.24 = 6,180.25 Sale, September 17 (245 x 11.24 = 2,753.80)

Cost of goods sold:

Cost of goods available for sale 8,056.25 Less ending inventory 3,426.45

4,629.80

Gross profit:

Sales 6,425.00 Less cost of goods sold

4,629.80

1,795.20

4.7 (Landmark Enterprises)

a Cost of ending inventory

1/5 1,900 @ 11.35 21,565

1/8 2,200 @ 11.02 24,244

1/24 3,800 @ 11.80 44,840

1/30 3,600 @ 11.52 41,472

2,300 @ 11.52 26,489

b Cost of goods available for sale (25,800 + 21,565 + 44,840)

P92,205

Number of units available for sale (2,400 + 1,900 + 3,800) ÷ 8,100

11,38

2,300

4-8 (Chic Department Store)

a FIFO cost basis

Cost percentage (2,400,000/4,000,000)

60%

P2,800,000 Less estimated cost of ending inventory 750,000

P2,050,000

b Average cost basis

Cost percentage (2,800,000/4,750,000)

58.95%

P2,800,000 Less estimated cost of ending inventory 736,875

P2,063,125 4-9 (Rockwell Club, Inc.)

Cost of sales:

Sales (160,500 x 12)

1,926,000

Less gross profit

738,600

Add ending inventory

42,000 x 7.40

310,800

3,000 x 7.20

21,600

332,400 45,000

Average cost per unit (369,750 ÷ 51,000 units) P 7.25

4.10 (DEC Company)

450,000

3,150,000

Cost of goods available for sale

P3,600,000

2,800,000

50,000

4-11

Estimated cost of goods sold (705,000 – 18,000)/ 1.20

P572,500

205,000

Cost of goods available for sale

P777,500

Less net purchases for the period (650,000 – 12,000 + 6,000) 644,000

4-12 (Manel’s Company)

Merchandise inventory, January 1 P2,000,000

Less goods undamaged located in showroom (200,000 +

80,000)

280,000 Estimated cost of merchandise destroyed by the flood P 460,000

4-13 (Old Rose Company)

Cost of goods available for sale

P1,820,000

Estimated cost of goods sold (2,200,000 – 50,000) x 70% 1,505,000

155,000

4-14 (Blazing Red Company)

Purchases:

Cost of goods available for sale

P2,664,240

Estimated cost of goods sold:

Cost percentage 70% 2,105,880

Less undamaged goods:

4.15 (London Company

Retail

Cost to retail ratio:

160,000 220,000+20,000-40,000

80%

4-16 (Alemars Drygoods, Inc.)

Retail

0

0

)

4-17 (Uniwide Sales)

4-18 (City Company)

Cost (under FIFO basis)

P26,000

Net realizable value (40,000 – 12,000)

P28,000

Lower of cost and net realizable value

P26,000

4-19 (Purple Company)

194,000

4-20 (Powder Blue Company)

Cost of goods available for sale

P8,000,000

1,200,000

4-21 (Rustan’s Trading)

4-22 (Sta Lucia Company)

Reported net income under average

method

P3,600,00

0

P5,000,00

0 P7,000,000 Difference in inventory using FIFO

0 P5,080,000 P7,530,000

4-23 (Grand Central, Inc.)

Net income reported for 2009

P658,000

Adjustments:

96,000

Cash advance for future manufacture and delivery of goods

MULTIPLE CHOICE QUESTIONS

Theory

2 7

0

5

0

a

MULTIPLE CHOICE QUESTIONS

Problems

MC21 d 90,000 x 80 x 90 = 64,800; 64,800 + 5,000 = 69,800

MC23 b 150,000 x 85 x 90 x 95 = 109,012.50

MC25 b (b) 450,000 ÷ 1.5 = 300,000; (d) 600,000 + 60,000 = 660,000

(e) 300,000 ÷ 1.5 = 200,000 + 30,000 = 230,000 3,000,000 + 300,000 + 660,000 + 230,000) = 4,190,000 MC26 a 5,000,000 + 80,000 + 800,000 – 25,000 = 5,855,000

MC28 b 3,280,000 + 900,000– 80,000 = 4,100,000 x 3% =123,000; 123,000–

27,000=96,000 MC29 c 550,000 + 90,000 + 380,000 + 450,000 + (150,000 x 80) = 1,590,000 MC30 c 104,000 ÷ 1.3 = 80,000; 80,000 x 30 = 24,000

24,000 + 56,000 + (32,500 – 25,000) = 87,500 MC31 b (3,000 x 35) + (2,000 x 36) + (1,000 x 37) = 214,000 Sales

(4,000 x 25) + (2,000 x 26) = 152,000 Cost of goods sold 214,000 – 152,000 = 62,000

MC32 c (1,600 x 8) + (4,800 x 9.60) = 58,880; 58,880 ÷ 6,400 = 9.20

MC33 c 400,000 + 1,280,000 –740,000 = 940,000 Direct materials used

940,000 + 960,000 + (50%x 906,000) = 2,380,000 Total mfg Cost 4,000,000 x 75% = 3,000,000 Cost of goods sold

3,000,000 + 1,310,000 – 1,500,000 = 2,810,000 Cost of goods avail for sale

2,380,000 + 1,100,000 – 2,810,000 = 670,000 MC34 b 600,000 + 1,500,000 – (2,240,000 ÷ 1.4) = 500,000

MC35 c 2,550,000 + 250,000 – 300,000 = 2,500,000 Purchases

2,800,000 + 900,000 – 700,000 = 3,000,000 Sales 3,000,000 ÷ 1.25 = 2,400,000 Cost of goods sold 180,000 + 2,500,000 – 2,400,000 = 280,000; 280,000 – 110,000

=170,000 shortage MC36 a 1,040,000 + 1,550,000 = 2,590,000; 1,700,000 + 2,000,000 =

3,700,000 2,590,000 ÷ 3,700,000 = 70%

520,000 + 2,180,000 – (2,500,000 x 70%) = 950,000 950,000 – (70% x 150,000) – 95,000 = 750,000 MC37 c 617,000 + 1,281,000 – 21,000 + 31,000 = 1,908,000 Avail for sale at

cost 1,057,000 + 2,158,000 – 35,000 = 3,180,000 Avail for sale at retail 1,908,000 ÷ 3,180,000 = 60% Cost to retail ratio

3,180,000 – 2,365,000 + 62,000 = 877,000; 877,000 – 780,000 = 97,000 97,000 x 60% = 58,200

MC38 d 408,8976 ÷ 524,200 = 78%; 450,200 – 5,100 = 445,100; 445,100 x 78%

= 347,178 105,650 + (378,245 – 10,295) = 473,600; 473,600 - 347,178 =126,422 126,422 – 69,738 – 5,000 = 51,684

MC39 d 47,075 + 213,327 + 3,400 = 263,802 Avail for sale at cost

70,025 + 306,375 = 18,900 – 7,800 – 10,640 = 376,860 Avail for sale at retail

263,802 ÷ 376,860 = 70%; 320,500 x 70% = 224,350 MC40 a 376,860 – 320,500 = 56,360; 56,360 – 39,390 = 16,970; 16,970 x 70%

= 11,879 MC41 a Repeated problem Please see Problem 4-15

MC42 b Confidence: cost 22; NRV = 30 – 3 = 27; lower is 22

Positive attitude: cost 55; NRV = 80 – 28 = 52; lower is 52