acct 3311 problems ch 9

# acct 3311 problems ch 9 - ACCT 3311 FALL 2007 PAGE 9-1...

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Sheet1 Page 1 ACCT 3311 FALL 2007 PAGE 9-1 Example 1. Cutlass Company sells an item with an historical cost of \$1.10, a selling price of \$1.30, selling costs of \$.30, and normal profit equal to 30% of the selling price. For each of the cases below, compute the lower of cost or market amount to be used for inventory purposes. Case Replacement cost 1 \$.80 3 1.15 Example 2. In January, BMP Stores purchased a truckload of clothing for \$9,900. The clothing consisted of men's shirts, men's pants, and shoes. Quantity Estimated selling price per item Shirts 400 \$15 Pants 200 \$25 Shoes 100 Pairs \$55 During the year, the company sold 350 of the shirts, 120 of the pants, and 80 pairs of shoes. Required: Compute the dollar amount to assign to ending inventory. Example 3. On November 30, 2004, Ark Company signed a firm contract to buy 100,000 pounds of raw materials at \$10 per pound on February 1, 2005. On December 20, 2004, the market price dropped to \$6 per pound. The price was not expected t o change for at least six months. What adjusting entry, if any, should Ark make on December 31, 2004 (year end)? 2003 were \$6,000,000. Purchases for the first quarter of 2003 totaled \$4,400,000. Compute the estimated inventory at the en d of the first quarter if: a. gross profit is 40% of sales. b. Markup on cost is 50%.

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acct 3311 problems ch 9 - ACCT 3311 FALL 2007 PAGE 9-1...

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