ch06 - Exercise Set C - PROBLEMS SET C P6-1C Durango...

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Unformatted text preview: PROBLEMS: SET C P6-1C Durango Country Limited is trying to determine the value of its ending inventory as of February 28, 2010, the company’s year-end. The following transactions occurred, and the ac- countant asked your help in determining whether they should be recorded or not. (a) On February 26, Durango shipped goods costing $800 to a customer and charged the cus- tomer $1,000. The goods were shipped with terms FOB destination and the receiving report indicates that the customer received the goods on March 2. (b) On February 26, Seller Inc. shipped goods to Durango under terms FOB shipping point.The invoice price was $350 plus $25 for freight.The receiving report indicates that the goods were received by Durango on March 2. (c) Durango had $500 of inventory isolated in the warehouse. The inventory is designated for a customer who has requested that the goods be shipped on March 10. (d) Also included in Durango’s warehouse is $400 of inventory that Craft Producers shipped to Slaymakker on consignment. (e) On February 26, Durango issued a purchase order to acquire goods costing $750. The goods were shipped with terms FOB destination on February 27. Durango received the goods on March 2. (f) On February 26, Durango shipped goods to a customer under terms FOB shipping point.The invoice price was $350 plus $25 for freight; the cost of the items was $300. The receiving re- port indicates that the goods were received by the customer on March 2. Instructions For each of the above transactions, specify whether the item in question should be included in ending inventory, and if so, at what amount. P6-2C Carey Distribution markets CDs of the performing artist Britney Agullierra.At the be- ginning of October, Carey had in beginning inventory 1,000 Agullierra CDs with a unit cost of $5. During October Carey made the following purchases of Agullierra CDs. Oct. 3 3,500 @ $6 Oct. 19 2,000 @ $8 Oct. 9 4,000 @ $7 Oct. 25 2,000 @ $9 During October 9,500 units were sold. Carey uses a periodic inventory system. Instructions (a) Determine the cost of goods available for sale. (b) Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods. (c) Which cost flow method results in (1) the highest inventory amount for the balance sheet and (2) the highest cost of goods sold for the income statement? P6-3C Butkus Company had a beginning inventory on January 1 of 100 units of Product WD- 44 at a cost of $21 per unit. During the year, the following purchases were made. Mar. 15 300 units at $24 Sept. 4 300 units at $28 July 20 200 units at $25 Dec. 2 100 units at $30 800 units were sold. Butkus Company uses a periodic inventory system....
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This note was uploaded on 09/19/2010 for the course ACCT 220 taught by Professor Ullmann during the Fall '10 term at University of Nebraska Kearney.

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ch06 - Exercise Set C - PROBLEMS SET C P6-1C Durango...

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