FARE Lecture Review 15.pdf - 30 Award 10.00 points Required...

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Unformatted text preview: 30. Award: 10.00 points Required information Problems? Adjust credit for all students. Required: Hemming uses a perpetual inventory system. Assume that ending inventory is made up of 45 units from the March 14 purchase, 75 units from the July 30 purchase, and all 100 units from the October 26 purchase. Using the specific identification method, calculate the following. a) Cost of Goods Sold using Specific Identification Available for Sale Date Activity Units Cost of Goods Sold Unit Cost Units Sold Unit Cost Ending Inventory Ending Inventory Unit Cost Units COGS Jan. 1 Beginning Inventory 200 $ 10.00 200 F $ 10.00 F Mar. 14 Purchase 350 $ 15.00 305 F $ 15.00 F 4,575 July 30 Purchase 450 $ 20.00 375 F $ 20.00 F Oct. 26 Purchase 100 $ 25.00 F $ 25.00 F F 1,100 F 880 F $ $ 2,000 F $ 10.00 F 45 F $ 15.00 F 675 7,500 75 F $ 20.00 F 1,500 0 100 F $ 25.00 F 14,075 F 220 F b) Gross Margin using Specific Identification Sales Less: Cost of goods sold Equals: Gross margin $35,200 (14,075) $21,125 Explanation: (a) Specific identification method—Cost of goods sold Cost of goods available for sale Ending inventory under specific identification 3/14 purchase (45 @ $15) 7/30 purchase (75 @ $20) 10/26 purchase (100 @ $25) Total ending inventory under specific identification $ 675 1,500 2,500 Cost of goods sold under specific identification (b) Specific identification method—Gross margin Sales Revenue (880 units sold × $40 selling price) Less: Specific identification cost of goods sold Gross profit Hints Hint #1 References Ending Inventory Cost $35,200 14,075 $21,125 $18,750 4,675 $14,075 $ 0 2,500 $ 4,675 31. Award: 10.00 points Required information Problems? Adjust credit for all students. Required: Hemming uses a periodic inventory system. (a) Determine the costs assigned to ending inventory and to cost of goods sold using FIFO. (b) Determine the costs assigned to ending inventory and to cost of goods sold using LIFO. (c) Compute the gross margin for each method. a) Periodic FIFO Cost of Goods Available for Sale Cost of Goods Sold Cost of Goods Cost per # of units Cost per # of units Available for unit sold unit Sale Beginning inventory 200 $ 10.00 F March 14 350 $ 15.00 July 30 450 $ 20.00 October 26 100 $ 25.00 $ Ending Inventory # of units Cost in ending per unit inventory Cost of Goods Sold 2,000 200 F $ 10.00 F 2,000 F 5,250 350 F $ 15.00 F 5,250 F 9,000 330 F $ 20.00 F 6,600 F 2,500 F Ending Inventory F Purchases: Total F b) Periodic LIFO 1,100 F $ 18,750 F F Cost of Goods Available for Sale $ 100 F 880 F $ 13,850 F Cost of Goods Sold Cost of Goods Cost per # of units Cost per # of units Available for unit sold unit Sale Beginning inventory F 120 2,000 $20.00 F F $25.00 F 220 F 2,400 2,500 $ 4,900 Ending Inventory # of units Cost in ending per unit inventory Cost of Goods Sold F 200 F $ 10.00 F March 14 F 350 F $ 15.00 F 5,250 330 F $ 15.00 F 4,950 July 30 F 450 F $ 20.00 F 9,000 450 F $ 20.00 F 9,000 October 26 F 100 F $ 25.00 F 2,500 100 F $ 25.00 F F 1,100 18,750 880 F F F F Ending Inventory 200 F $10.00 F 20 F $15.00 F $ 2,000 Purchases: Total c) Gross Margin Sales Cost of goods sold Gross margin FIFO $ 35,200 F $ F F 2,500 $ 16,450 LIFO $ 35,200 13,850 16,450 $ 21,350 $ 18,750 Explanation: Cost of goods available for sale = $18,750 (a) FIFO (100 × $25) + (120 × $20) (200 × $10) + (350 × $15) + (330 × $20) (b) LIFO (200 × $10) + (20 × $15) (100 × $25) + (450 × $20) + (330 × $15) Ending Inventory $ 4,900 $ 2,300 Cost of Goods Sold $13,850 $16,450 (c) FIFO Gross margin Sales revenue (880 units sold × $40 selling price) Less: FIFO cost of goods sold Gross margin $ 35,200 13,850 $ 21,350 LIFO Gross margin Sales revenue (880 units sold × $40 selling price) Less: LIFO cost of goods sold Gross margin Hints Hint #1 References $35,200 16,450 $18,750 F 220 F F F F F 300 $ 2,300 32. Award: 10.00 points Problems? Adjust credit for all students. Martinez Company's ending inventory includes the following items. Product Helmets Bats Shoes Uniforms Units 24 17 38 42 Cost per Unit $ 50 78 95 36 Market per Unit $ 54 72 91 36 Compute the lower of cost or market for ending inventory applied separately to each product. Per Unit Inventory Items Units Cost $ 50 Total Market $ Cost 54 $ LCM Applied to Items Market Helmets 24 1,200 $ Bats 17 78 72 1,326 1,224 1,224 Shoes 38 95 91 3,610 3,458 3,458 Uniforms 42 36 36 1,512 F $ 7,648 F No further explanation details are available for this problem. Hint #1 References $ 1,512 Explanation: Hints 1,296 $ 7,490 1,200 1,512 F $ 7,394 33. Award: 10.00 points Problems? Adjust credit for all students. Cruz Company uses LIFO for inventory costing and reports the following financial data. It also recomputed inventory and cost of goods sold using FIFO for comparison purposes. 2017 $160 740 240 660 220 200 LIFO inventory LIFO cost of goods sold FIFO inventory FIFO cost of goods sold Current assets (using LIFO) Current liabilities 2016 $110 680 110 645 180 170 1. Compute its current ratio, inventory turnover, and days' sales in inventory for 2017 using (a) LIFO numbers and (b) FIFO numbers. (a) Compute its current ratio, inventory turnover, and days' sales in inventory for 2017 using LIFO numbers. Numerator / Denominator = Current ratio $ 220.0 F / $ 200.0 Inventory turnover $ 740.0 / F $ 135.0 Days' sales in inventory $ 160.0 F / $ 740.0 x 365 = Ratio F = F 1.1 Fto 1 F = F 5.5 Ftimes F 78.9 Fdays (b) Compute its current ratio, inventory turnover, and days' sales in inventory for 2017 using FIFO numbers. Numerator / Denominator = Current ratio $ 300.0 F / $ 200.0 F = Inventory turnover $ 660.0 F / $ 175.0 F = Days' sales in inventory $ 240.0 / F $ 660.0 x 365 = Ratio F F F Explanation: 1. LIFO ratio computations LIFO current ratio (2017) = $220 / $200 = 1.1 LIFO inventory turnover (2017) = $740 / [($110 + $160) /2] = 5.5 LIFO days' sales in inventory (2017) = ($160 / $740) × 365 = 78.9 days FIFO ratio computations FIFO current ratio (2017) = $300* / $200 = 1.5 FIFO inventory turnover (2017) = $660 / [($110 + $240) / 2] = 3.8 FIFO days' sales in inventory (2017) = ($240 / $660) × 365 = 132.7 days *$220 + ($240 – $160) Hints Hint #1 References 1.5 Fto 1 3.8 Ftimes 132.7 Fdays ...
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