E7-4
L07-1
Inferring Merchandise Purchases
Abercrombie and Fitch is a leading retailer of casual appar~l for men, women, and children
that you are employed as a stock analyst and your boss has JUSt completed a review of th · Assurne
crombie annual report. She provided you with her notes, but they
some infor mation
newth Aber.
. are
. missing
h
b
Ab
need. Her notes show that the ending inventory fior
ercrom 1e m t e current and previous
at You
$569,818,000 and $385,857,000, respe~t~vely. Net sales for the current year were $4,lS&,OS&,~~ars Was
of goods sold was $1639188,000.
Net mcome
'
'
. was $127,658,000. For your analysis • you determ·0. Cost
you need to know the amount of purchases for the year.
ine that
Required:
Can you develop the information from her notes? Explain and show calculations. (Hint·. usethe co
goods sold equation or the inventory T-account to solve for the needed value.)
st of
E7-5
L07-2
Calculating Ending Inventory and Cost of Goods Sold under FIFO, LIFO, and Average Cost
Penn Company uses a periodic inventory system. At the end of the annual accounting period D
of the current year, the accounting records provided the following information for product,!: ecemberJJ
Inventory, December 31, prior year
For the current year:
Purchase, March 21
Purchase, August 1
Inventory, December 31, current year
Units
Unit Cost
2,000
$5
5,000
3,000
4,000
6
8
Required:
Compute ending inventory _and cost of goods sold for the
.
cost inventory costing methods (ff t· S
d'
current year under FIFO, LIFO, and average
.
.
. m . et up a ~acent columns for each case.)