Reference no: EM131377674

Question 1: Martinez Company sells one product. Presented below is information for January for Martinez Company.

Jan. 1	Inventory	107	units at $5 each
4	Sale	84	units at $8 each
11	Purchase	146	units at $6 each
13	Sale	118	units at $9 each
20	Purchase	153	units at $7 each
27	Sale	89	units at $10 each

Martinez uses the FIFO cost flow assumption. All purchases and sales are on account.

Assume Martinez uses a periodic system. Prepare all necessary journal entries, including the end-of-month closing entry to record cost of goods sold. A physical count indicates that the ending inventory for January is 115 units.

Question 2: Pharoah Company was formed on December 1, 2016. The following information is available from Pharoah's inventory records for Product BAP.

	Units	Unit Cost
January 1, 2017 (beginning inventory)	726	$ 7.00
Purchases:
January 5, 2017	1,452	8.00
January 25, 2017	1,573	9.00
February 16, 2017	968	10.00
March 26, 2017	726	11.00

A physical inventory on March 31, 2017, shows 1,936 units on hand.

Prepare schedule to compute the ending inventory at March 31, 2017, under FIFO inventory method.

Question 3: Novak Company uses the LCNRV method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2017, consists of products D, E, F, G, H, and I. Relevant per unit data for these products appear below.

	Item D	Item E	Item F	Item G	Item H	Item I
Estimated selling price	$149	$136	$118	$112	$136	$112
Cost	93	99	99	99	62	45
Cost to complete	37	37	31	43	37	37
Selling costs	12	22	12	25	12	25

Using the LCNRV rule, determine the proper unit value for balance sheet reporting purposes at December 31, 2017, for each of the inventory items above.

Question 4: Metlock Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis.

Item No.	Quantity	Cost per Unit	Cost to Replace	Estimated Selling Price	Cost of Completion and Disposal	Normal Profit
1320	1,300	$3.23	$3.03	$4.55	$0.35	$1.26
1333	1,000	2.73	2.32	3.54	0.51	0.51
1426	900	4.55	3.74	5.05	0.40	1.01
1437	1,100	3.64	3.13	3.23	0.25	0.91
1510	800	2.27	2.02	3.28	0.81	0.61
1522	600	3.03	2.73	3.84	0.40	0.51
1573	3,100	1.82	1.62	2.53	0.76	0.51
1626	1,100	4.75	5.25	6.06	0.51	1.01

From the information above, determine the amount of Metlock Company inventory.

Question 5: You are called by Tim Duncan of Grouper Co. on July 16 and asked to prepare a claim for insurance as a result of a theft that took place the night before. You suggest that an inventory be taken immediately. The following data are available.

Inventory, July 1	$ 36,600
Purchases-goods placed in stock July 1-15	81,300
Sales revenue-goods delivered to customers (gross)	119,400
Sales returns-goods returned to stock	3,600

Your client reports that the goods on hand on July 16 cost $31,300, but you determine that this figure includes goods of $6,300 received on a consignment basis. Your past records show that sales are made at approximately 30% over cost. Duncan's insurance covers only goods owned.

Compute the claim against the insurance company.

Question 6: ildhorse Lumber Company handles three principal lines of merchandise with these varying rates of gross profit on cost.

Lumber	25%
Millwork	30%
Hardware and fittings	40%

On August 18, a fire destroyed the office, lumber shed, and a considerable portion of the lumber stacked in the yard. To file a report of loss for insurance purposes, the company must know what the inventories were immediately preceding the fire. No detail or perpetual inventory records of any kind were maintained. The only pertinent information you are able to obtain are the following facts from the general ledger, which was kept in a fireproof vault and thus escaped destruction.

	Lumber	Millwork	Hardware
Inventory, Jan. 1, 2017	$249,100	$89,700	$44,200
Purchases to Aug. 18, 2017	1,493,800	369,300	158,100
Sales to Aug. 18, 2017	2,085,100	514,800	200,200

Submit your estimate of the inventory amounts immediately preceding the fire.

Question 7: The records of Nash's Boutique report the following data for the month of April.

Sales revenue	$107,900		Purchases (at cost)	$51,200
Sales returns	2,100		Purchases (at sales price)	89,300
Markups	10,900		Purchase returns (at cost)	2,100
Markup cancellations	1,600		Purchase returns (at sales price)	3,200
Markdowns	8,700		Beginning inventory (at cost)	33,024
Markdown cancellations	2,900		Beginning inventory (at sales price)	48,200
Freight on purchases	2,600

Compute the ending inventory by the conventional retail inventory method.

Question 8: Presented below is information related to Indigo Company.

	Cost	Retail
Beginning inventory	$ 58,110	$101,500
Purchases (net)	121,450	191,400
Net markups		10,171
Net markdowns		25,358
Sales revenue		192,300

Compute the ending inventory at retail.

Compute a cost-to-retail percentage under the following conditions.

(1) Excluding both markups and markdowns.                       

(2) Excluding markups but including markdowns.                               

(3) Excluding markdowns but including markups.                               

(4) Including both markdowns and markups.                        

Which of the methods in (b) above does the following?

(1) Provides the most conservative estimate of ending inventory.

(2) Provides an approximation of lower-of-cost-or-market.

(3) Is used in the conventional retail method.

Compute ending inventory at lower-of-cost-or-market.

Compute cost of goods sold based on (d).

Compute gross margin based on (d).

Attachment:- Assignment Questions.rar