| B. Han Co. is a small wholesaler of fashion luggage. The accounting records show the following | |
| purchases and sales of the Style 80 Suburban during the first year of business. | |
| STYLE 80 SUBURBAN | |
| Purchases | | Sales | | |
| Date | Units | Price | Total Cost | | Date | Units | | |
| Jan. 20 | 45 | $ 71 | $ 3,195 | | Feb. 15 | 40 | | |
| Apr. 10 | 70 | 85 | 5,950 | | Apr. 20 | 50 | | |
| Aug. 5 | 30 | 110 | 3,300 | | Aug. 24 | 35 | | |
| Dec. 21 | 55 | 125 | 6,875 | | Dec. 27 | 15 | | |
| Total | 200 | | $ 19,320 | | | 140 | | |
| A physical count of Style 80 at the end of the year reveals that 60 are still on hand. | |
| Instructions: (1) Determine the cost of Style 80 inventory as of December 31 by means of the | |
| average cost method with a periodic system: | |
| Average unit cost = $ | | | | =$ | | | |
| 60 | units in the inventory @ | $ | | =$ | | | |
| | |
| | |
| | |
| (2) Determine the cost of Style 80 inventory as of December 31 by means of the first-in, first-out | |
| (fifo) method with a periodic system: | |
| INVENTORY (Fifo Periodic) | |
| | Units | | Price | | Total Cost | | |
| | | $ | | $ | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | $ | | | |
| (3) Determine the cost of Style 80 inventory as of December 31 by means of the last-in, first-out | |
| (lifo) method with a periodic inventory system: | |
| INVENTORY (Lifo Periodic) | |
| | Units | | Price | | Total Cost | | |
| | | $ | | $ | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | $ | | | |
| (4) Determine the cost of Style 80 inventory as of December 31 by means of the last-in, first-out | |
| (lifo) method with a perpetual inventory system: | |
| INVENTORY (Lifo Perpetual) | |
| | Units | | Price | | Total Cost | | |
| | | $ | | $ | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | $ | | | |
| | |
| C. Cash inc. operates a department store and takes a physical inventory at the end of each calendar |
| year. However, Cash likes to have a balance sheet and an income statement available at the end of |
| each month in order to study financial position and operating trends. Cash estimates inventory at |
| the end of each month for accounting statement preparation purposes. The following information is |
| available as of January 31 of the current year: |
| | Cost | | Retail | |
| Merchandise inventory, January | $ | 123,600 | | $ | 172,000 | |
| Purchases in January | 269,000 | | 480,600 | |
| Purchases returns and allowances - January | 5,000 | 6,600 | |
| Sales in January | | 495,000 | |
| Sales returns and allowances - January | | 11,000 | |
| | |
| Instructions: (1) Determine the estimated cost of the inventory on January 31, using the Retail Method. |
| | Cost | | Retail | |
| Merchandise inventory, January 1 | $ | | | $ | | |
| Purchases in January (net) | | | | |
| Merchandise available for sale | | | | | |
| Ratio of cost to retail: | |
| $ | | | | = | | % | | |
| Sales in January (net) | | | | |
| Merchandise inventory, January 31, at retail | | $ | | |
| Merchandise inventory, January 31, at estimated cost | | |
| | $ | | x | | % | = | $ | | |
| (2) Determine the estimated cost of inventory on January 31, using the Gross Profit method. On the |
| basis of past experience, Cash estimates a rate of gross profit of 36% of net sales. |
| Cost | |
| Merchandise inventory, January 1 | $ | | |
| Purchases in January (net) | | | |
| Merchandise available for sale | $ | | |
| Sales in January (net) | $ | | | |
| Less estimated gross profit ($ | | x | | % | = | | | |
| Estimated cost of merchandise sold | | |
| Estimated merchandise inventory, January 31 | $ | | | B. Han Co. is a small wholesaler of fashion luggage. The accounting records show the following | | | purchases and sales of the Style 80 Suburban during the first year of business. | | | STYLE 80 SUBURBAN | | | Purchases | | Sales | | | | Date | Units | Price | Total Cost | | Date | Units | | | | Jan. 20 | 45 | $ 71 | $ 3,195 | | Feb. 15 | 40 | | | | Apr. 10 | 70 | 85 | 5,950 | | Apr. 20 | 50 | | | | Aug. 5 | 30 | 110 | 3,300 | | Aug. 24 | 35 | | | | Dec. 21 | 55 | 125 | 6,875 | | Dec. 27 | 15 | | | | Total | 200 | | $ 19,320 | | | 140 | | | | A physical count of Style 80 at the end of the year reveals that 60 are still on hand. | | | Instructions: (1) Determine the cost of Style 80 inventory as of December 31 by means of the | | | average cost method with a periodic system: | | | Average unit cost = $ | | | | =$ | | | | | 60 | units in the inventory @ | $ | | =$ | | | | | | | | | | | | | | (2) Determine the cost of Style 80 inventory as of December 31 by means of the first-in, first-out | | | (fifo) method with a periodic system: | | | INVENTORY (Fifo Periodic) | | | | Units | | Price | | Total Cost | | | | | | $ | | $ | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | | | | | (3) Determine the cost of Style 80 inventory as of December 31 by means of the last-in, first-out | | | (lifo) method with a periodic inventory system: | | | INVENTORY (Lifo Periodic) | | | | Units | | Price | | Total Cost | | | | | | $ | | $ | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | | | | | (4) Determine the cost of Style 80 inventory as of December 31 by means of the last-in, first-out | | | (lifo) method with a perpetual inventory system: | | | INVENTORY (Lifo Perpetual) | | | | Units | | Price | | Total Cost | | | | | | $ | | $ | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | | | | | | | | C. Cash inc. operates a department store and takes a physical inventory at the end of each calendar | | year. However, Cash likes to have a balance sheet and an income statement available at the end of | | each month in order to study financial position and operating trends. Cash estimates inventory at | | the end of each month for accounting statement preparation purposes. The following information is | | available as of January 31 of the current year: | | | Cost | | Retail | | | Merchandise inventory, January | $ | 123,600 | | $ | 172,000 | | | Purchases in January | 269,000 | | 480,600 | | | Purchases returns and allowances - January | 5,000 | 6,600 | | | Sales in January | | 495,000 | | | Sales returns and allowances - January | | 11,000 | | | | | | Instructions: (1) Determine the estimated cost of the inventory on January 31, using the Retail Method. | | | Cost | | Retail | | | Merchandise inventory, January 1 | $ | | | $ | | | | Purchases in January (net) | | | | | | Merchandise available for sale | | | | | | | Ratio of cost to retail: | | | $ | | | | = | | % | | | | Sales in January (net) | | | | | | Merchandise inventory, January 31, at retail | | $ | | | | Merchandise inventory, January 31, at estimated cost | | | | | $ | | x | | % | = | $ | | | | (2) Determine the estimated cost of inventory on January 31, using the Gross Profit method. On the | | basis of past experience, Cash estimates a rate of gross profit of 36% of net sales. | | Cost | | | Merchandise inventory, January 1 | $ | | | | Purchases in January (net) | | | | | Merchandise available for sale | $ | | | | Sales in January (net) | $ | | | | | Less estimated gross profit ($ | | x | | % | = | | | | | Estimated cost of merchandise sold | | | | Estimated merchandise | |
