Brief Exercise 8-3
Swifty Company took a physical inventory on December 31 and determined that goods costing
$218,900 were on hand. Not included in the physical count were $25,610 of goods purchased
from Pelzer Corporation, f.o.b. shipping point, and $22,510 of goods sold to Alvarez Company for
$32,160, f.o.b. destination. Both the Pelzer purchase and the Alvarez sale were in transit at yearend. What amount should Swifty report as its December 31 inventory?
$
December 31 inventory
Brief Exercise 8-4
Crane Company uses a periodic inventory system. For April, when the company sold 450 units,
the following information is available.
Units
Unit Cost
April 1 inventory
280
$17
$ 4,760
April 15 purchase
420
20
8,400
April 23 purchase
300
22
6,600
1,000
Total Cost
$19,760
Calculate weighted average cost per unit. (Round answer to 2 decimal places, e.g. 2.76.)
$
Weighted average cost per unit
Compute the April 30 inventory and the April cost of goods sold using the average-cost
method. (Round answers to 0 decimal places, e.g. 2,760.)
Ending inventory
Cost of goods sold
$
$
Brief Exercise 8-5
Sweet Company uses a periodic inventory system. For
April, when the company sold 570 units, the following
information is available.
Units
Unit Cost
Total Cost
April 1 inventory
250
$28
$ 7,000
April 15 purchase
350
34
11,900
April 23 purchase
400
36
1,000
14,400
$33,300
Compute the April 30 inventory and the April cost of
goods sold using the FIFO method.
$
Ending inventory
$
Cost of goods sold
April 23
=
400 x $36
=
$ 14,400
April 15
=
30 x $34
=
1,020
Ending inventory
$ 15,420
Cost of goods available for sale
$33,300
Deduct ending inventory
15,420
Cost of goods sold
$ 17,880
Brief Exercise 8-6
Wildhorse Company uses a periodic inventory system. For April, when the company
sold 550 units, the following information is available.
Units
Unit Cost
Total Cost
April 1 inventory
260
$15
$ 3,900
April 15 purchase
430
18
7,740
April 23 purchase
310
20
6,200
1,000
$17,840
Compute the April 30 inventory and the April cost of goods sold using the LIFO method.
Ending inventory
Cost of goods sold
$
$
April 1
=
260 x
=
$15
$3,900
April 15
=
190 x
=
$18
3,420
Ending inventory
$7,320
Cost of goods available for sale
$17,840
Deduct ending inventory
Cost of goods sold
7,320
$ 10,520
Exercise 8-2
In your audit of Henry Company, you find that a physical inventory on December 31, 2017,
showed merchandise with a cost of $427,060 was on hand at that date. You also discover the
following items were all excluded from the $427,060.
1. Merchandise of $58,470 which is held by Henry on consignment. The consignor is the Max
Suzuki Company.
2. Merchandise costing $35,530 which was shipped by Henry f.o.b. destination to a customer on
December 31, 2017. The customer was expected to receive the merchandise on January 6,
2018.
3. Merchandise costing $46,250 which was shipped by Henry f.o.b. shipping point to a customer
on December 29, 2017. The customer was scheduled to receive the merchandise on January
2, 2018.
4. Merchandise costing $82,500 shipped by a vendor f.o.b. destination on December 30, 2017,
and received by Henry on January 4, 2018.
5. Merchandise costing $55,170 shipped by a vendor f.o.b. shipping point on December 31,
2017, and received by Henry on January 5, 2018.
Based on the above information, calculate the amount that should appear on Henry’s balance
sheet at December 31, 2017, for inventory.
$
Inventory as on December 31, 2017
Exercise 8-10
Inventory information for Part 311 of Kingbird Corp. discloses the following information for the
month of June.
June 1
Balance
304 units @ $17
June 10
Sold
201 units @ $41
11
Purchased
804 units @ $21
15
Sold
503 units @ $43
20
Purchased
499 units @ $22
27
Sold
301 units @ $46
Assuming that the periodic inventory method is used, compute the cost of goods sold and
ending inventory under (1) LIFO and (2) FIFO.
(1)
LIFO
Cost of Goods Sold
Ending Inventory
(2)
FIFO
$
$
$
$
Assuming that the perpetual inventory method is used and costs are computed at the time of
each withdrawal, what is the value of the ending inventory at LIFO?
The ending inventory at LIFO
$
Assuming that the perpetual inventory method is used and costs are computed at the time of
each withdrawal, what is the gross profit if the inventory is valued at FIFO?
$
Gross Profit (FIFO)
Sales Revenue
Cost of Goods Sold
$43,716 = ($41 @ 201) + ($43 @ 503) + ($46 @ 301)
19,889 = (201 @ $17) + (103 @ $17) + (400 @ $21) + (301 @ $21)
Gross Profit (FIFO) $23,827
Note: FIFO periodic and FIFO perpetual provide the same gross profit and inventory value.
Multiple Choice Question 33
Goods in transit which are shipped f.o.b. destination should be
included in the inventory of the seller.
included in the inventory of the buyer.
included in the inventory of the shipping company.
none of these answers are correct.
Multiple Choice Question 36
During 2017 Carne Corporation transferred inventory to Nolan Corporation and agreed to
repurchase the merchandise early in 2018. Nolan then used the inventory as collateral to borrow
from Norwalk Bank, remitting the proceeds to Carne. In 2018 when Carne repurchased the
inventory, Nolan used the proceeds to repay its bank loan.
On whose books should the cost of the inventory appear at the December 31, 2017 balance sheet
date?
Nolan Corporation, with Carne making appropriate note disclosure of the transaction.
Nolan Corporation.
Norwalk Bank.
Carne Corporation.
Multiple Choice Question 60
Which inventory costing method most closely approximates current cost for each of the following:
Ending Inventory
Cost of Goods Sold
LIFO
FIFO
FIFO
FIFO
FIFO
LIFO
LIFO
LIFO