Intermediate Accounting
—
1
Chapter 8: Inventory
Question Sheet
1.
[
The records for Dash Retail store was provided for the following year 2012
Gross Sales
$440,000
Sales Returns
3,000
Markup Cancellations
4,000
Markups
8,000
Markdowns
5,000
Purchses:
At retail
400,000
At cost
250,000
Purchase Returns:
At Retail
3,000
At cost
2,200
Beginning_Inventory
At Retail
90,000
At cost
33,000
Freight on Purchases
10,000
Markdown Cancellations
4,000
Required:
Estimate the valuation of ending inventory using the gross margin and the retail sales method.
The gross margin percentage is 54 %
2.
MC’s corporation produces and sells off road trucks. The price of each truck is $48,000. The cost
of production for these off road trucks is $41,000. The list price of each truck will be reduced by
$1,000 beginning this year. MC will also be giving a 12% discount to its regular customers after
the price reduction and the sales agents earn 5% in commissions on the price of the truck
Calculate the amount of NRV and prepare a journal entry for the amount of write down if
necessary using the direct write-down and allowance (indirect) method
Prepared by: Charanjit Singh
Intermediate Accounting
—
1
Chapter 8: Inventory
Question Sheet
3.
ABC Vacuums Ltd sells three types of vacuum cleaners at retail.
Each one is sold in both basic
and deluxe model. Information relating to the inventory for
2015 was as follows
Model
Floor Model:
Basic
Deluxe
Shop-VAC Model:
Basic
Deluxe
Canister Model:
Basic
Deluxe
Units
Cost
NRV
40
15
$50
80
$60
100
35
15
50
80
40
85
20
25
40
110
35
140
Required:
a.
Determine the ending value in the ending inventory for each individ
ual model type’and for a
group as a whole
b.
Prepare necessary entries to adjust inventory to LC-NRV for individ
ual models types and a
group as a whole using the indirect method
Prepared by: Charanjit Singh
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