acct 3311 problems ch 8

acct 3311 problems ch 8 - ACCT 3311 FALL 2007 PAGE 8-1...

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Sheet1 Page 1 ACCT 3311 FALL 2007 PAGE 8-1 Example 1. Yount Company started operations on 1-1-2005. Purchases Purchases Quantity Unit Sales (units) Cost Quantity 1-1-2005 500 $10 1-4-2005 300 $12 1-10-2005 400 1-15-2005 400 $14 1-21-2005 200 $15 1-28-2005 500 REQUIRED: Compute the cost assigned to the 1-31-2005 inventory under the following cost flow assumptions: 1. FIFO - periodic inventory. 2. LIFO - periodic inventory. 3. Average Cost - periodic inventory. 4. FIFO - perpetual inventory. 5. LIFO - perpetual inventory. 6. Average Cost - perpetual inventory. Example 2. Brewer Company had the following transactions during the month of June: June 10. Purchased merchandise on account, $8000, terms 2/10, n/30. June 13. Returned part of merchandise, $500, and received credit on account. June 15. Purchased merchandise on account, $10,000, terms 1/10, n/30. June 19. Paid remainder of June 10 purchase (discount taken). June 24. Paid $5000 of June 15 invoice (discount taken). June 30. Year end adjusting entries. REQUIRED: Prepare journal entries to record the above transactions using 1. The gross method for purchase discounts. 2. The net method for purchase discounts. Example 3. On 1-1-2001, Zeta Company adopted dollar value LIFO. The cost assigned to inventory on this date was $50,000. The price index was 100. Ending inventory Price index Year (Year end prices) Year End 12-31-2001 $75,000 125
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Sheet1 Page 2 12-31-2002 91,000 130 12-31-2003 77,000 140 12-31-2004 120,000 150 REQUIRED: Compute ending inventory for each of the four years using dollar value LIFO R ACCT 3311 FALL 2007 PAGE 8-2 Example 4. Beta Company adopted dollar value LIFO on 1-1-2001 when the price index was 110 and the cost of its inventory was $50,000. Year Ending inventory (Year end prices) Price index Year End REQUIRED: Compute the value assigned to ending inventory using dollar value LIFO. Example 5. On January 1, 2002, the end of the fiscal year, Ozark Wood Products, Inc., decided to adopt the dollar value LIFO method of pricing ending inventories. The inventory at this date had a cost of $105,000 with a cost index of 100. Ending inventory Price index Year (Year end prices) Year End 12-31-2002 $140,000 125 12-31-2003 196,000 140 12-31-2004 154,560 115 12-31-2005 109,200 120 REQUIRED: Compute the ending inventory for each of the years 2002 through 20055 using dollar value LIFO. Example 6. Kicker Company uses the LIFO inventory method. Its 2001 net income was $2,000,000. In a note to the financial statements, Kicker disclosed that had FIFO been used, beginning inventory would have been $900,000 higher and ending inventory would have been $1,400,000 higher. Required: Assuming a 30% income tax rate, compute Kickerhs net income for 2001 had FIFO been used instead of LIFO.
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Sheet1 Page 3 Example 7. Cozier Company adopted dollar value LIFO on 1-1-2001 when the price index was 100 and the cost of its inventory was $100,000. Ending inventory Price index
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acct 3311 problems ch 8 - ACCT 3311 FALL 2007 PAGE 8-1...

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