Consignment/FOB Example Roger Home Goods sells vintage home items, which it obtains on
consignment and through purchase. The following events occurred close to Roger’s March 31
year end.
________ a. On April 2, Roger received goods on consignment from Old Stuff Corp.
________ b. On March 31, Roger received goods on consignment from Old Stuff Corp.
________ c. Goods in transit to Roger were shipped by Just Like New, Inc. on March 31, FOB
shipping point.
________ d. Goods in transit to Roger were shipped by Just Like New, Inc. on March 31, FOB
destination.
Indicate (Yes or No) whether Roger should include each item in its inventory balance at March 31.
FIFO Example
LIFO Example
WAC Example
Sharp Example:
FIFO:
Sharp Example:
LIFO:
Sharp Example:
WAC:
oots ompan is preparing the annual financial statements dated ecem er 31.
nding inventor is presentl recorded at its total cost of
. nformation
a out its inventor items follows
1.
.
3.
ompute the
M R write down per unit and in total for each item in the
ta le. lso compute the total overall write down for all items.
ow will the write down of inventor to
e penses reported for the ear.
M R affect the compan s
ompute the amount that should e reported for the inventor on ecem er
31 after the
M R rule has een applied to each item.
Home Depot/Lowe’s Inventory Ratios
a De t
pense
a De t
pense
at are et Re eiva es
re it a es
et o
amp e
in
et o
amp e
ample iang roductions nc. used the aging of accounts receiva le method to
estimate that its llowance for ou tful ccounts should e 1
. The account
had an unad usted credit alance of
at that time.
repare transaction anal sis and ournal entries for each of the following.
a. The appropriate ad de t ad ustment was recorded at ear end.
. ater an account receiva le of
written off.
was determined to e uncollecti le and
Ratio na ysis Re eiva es
Home Depot/Lowe’s Re eiva e Ratios
ergman ompan ordered e uipment on anuar 1 with a purchase
price of
. n the date of deliver
anuar
the compan paid
1
on the e uipment and signed a long term note pa a le for the
alance. n anuar 3 it paid
for freight on the e uipment. n
anuar
ergman paid cash for installation costs relating to the
e uipment amounting to
. n ecem er 31 the end of the
accounting period
ergman recorded depreciation on the machine using
the straight line method with an estimated useful life of 1 ears and a
residual value of
.
Record each of the transactions prior to ecem er 31
ergman e ample continued
.
ompute the ac uisition cost of the e uipment
Record the depreciation e pense for the first ear of use
hat should e the oo value of the machine at the end of the
second ear
n
at urgers purchased and installed electronic pa ment
e uipment at a cost of
. The e uipment has a residual value
of 1
. The e uipment is e pected to process 1
pa ments
over its 3 ear useful life. er ear e pected pa ment transactions are
1
in ear 1
in ear and 1 1 in ear 3. omplete
a depreciation schedule for each of the three depreciation methods .
traight line
n
at
urgers e ample
nits of roduction
n
at
ou le
urgers e ample
eclining alance
ed
orporation sells a deliver truc for 1
. ed
had
originall purchased the truc for 3
and had recorded
depreciation for 3 ears.
alculate the amount of gain or loss and record the disposal
assuming that ccumulated epreciation at the time of sale was
a.
.
c.
1
1
1
ace alue
tated Rate
Mar et Rate
ssue rice
1
.1
for
ample RTR ompan repurchases 1 shares of its own stoc
per share
ater RTR
ompan resold all 1 shares for
1 par
per share
T pes of hares ample
recent annual report for eneral Mills disclosed
that 1 illion shares of common stoc have een authori ed. t the end of
1
million shares had een issued and the num er of shares in
treasur stoc was 1 million. uring the ear the onl common share
transactions were that million common shares were reissued from treasur
and 11 million common shares were purchased and held as treasur stoc .
ow man common shares were
ow man common shares were
ow man common shares were
at ear end
at ear end
at ear end
reas ry to
amp e
The following transactions occurred for ootsma orporation
pr.
urchased 1
shares of the compan s own common stoc for
per share the stoc is now held in treasur
ug. 1
ssued
of the shared purchased on pril for
per share
ep.
ssued
more of the shares purchased on pril for
per share
Record the ug.
transaction
Record the ug. 1 transaction
Record the ep.
Treasur
toc
transaction
ample cont
.
hat impact does the purchase of treasur stoc have on dividends paid
hat impact does the reissuance of treasur stoc for an amount higher
than purchase price have on net income
ote repurchase of preferred stoc is
referred to as a
. ot
treated as treasur .reverse original issuance
is t e on y ratio re
ire to e reporte
L
L
t is ratio
yt e
ash low ategories ample
isted elow are some of the items which appeared on a recent i e nc.
cash flow statement. ndicate whether each item is disclosed in the
perating
nvesting
or inancing
section of their cash flow
statement.
1. dditions to long
term de t
. epreciation
3. dditions to e uipment
. ncrease decrease in accounts pa a le
. ncrease decrease in inventor
. ash received from disposal of e uipment
. a ment of dividends
. ssuance of stoc
. et income
Cash Flow Examples: