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ACT 6692 Mod 10 Assignment

# ACT 6692 Mod 10 Assignment - ACT 6692 Module 10...

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ACT 6692 Module 10 – Assignment (Problems) 10-1—Inventory methods Flynt Company was formed on December 1, 2006. The following information is available from Flynt 's inventory record for Product X. Units Unit Cost January 1, 2007 (beginning inventory) 1,600 \$18.00 Purchases: January 5, 2007 2,600 \$20.00 January 25, 2007 2,400 \$21.00 February 16, 2007 1,000 \$22.00 March 15, 2007 1,800 \$23.00 A physical inventory on March 31, 2007, shows 2,500 units on hand. Instructions Prepare schedules to compute the ending inventory at March 31, 2007, under each of the following inventory methods: (a) FIFO. (b) LIFO. (c) Weighted-average. Show supporting computations in good form. 10-2—Perpetual LIFO A record of transactions for the month of May was as follows: Purchases Sales May 1 (balance) 400 @ \$4.20 May 3 300 @ \$7.00 4 1,300 @ \$4.10 6 1,000 @ 7.00 8 800 @ \$4.30 12 900 @ 7.50 14 700 @ \$4.40 18 400 @ 7.50 22 1,200 @ \$4.50 25 1,400 @ 8.00 29 500 @ \$4.55 Assuming that perpetual inventory records are kept in dollars, determine the inventory using LIFO. 10-3—Analysis of gross profit During 2007, Hill’s Drug Company experienced a significant increase in the rate of gross profit on sales, compared with the rate it has averaged in recent years. You are asked to determine the most likely reason for this improvement. Support your answer. The following data are from the records of the company: 2007 sales (at an average price of \$40 a unit) were \$1,800,000. 2007 purchases (at an average cost of \$24 a unit) were \$960,000. The company uses the LIFO inventory method and has used it since 1982.

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10-4—Dollar-value LIFO Day Company adopted the dollar-value LIFO inventory method on 12/31/06. On this date, its inventory consisted of the following items. Item Number of Units Cost Per Unit Total Cost X 200 \$2.00 \$ 400 Y 600 4.50 2,700 \$3,100 Additional information: December 31 2007 2008 1. Units of X in inventory 300 400 2. Cost of each X unit \$3.00 \$3.25 3. Units of Y in inventory 800 1,200 4. Cost of each Y unit \$5.50 \$6.00 Instructions (a) Compute the price index for 2007. Round to 2 decimal places. (b) Calculate the 12/31/07 inventory. Label all numbers. (c) Compute the price index for 2008. Round to 2 decimal places. (d) Calculate the 12/31/08 inventory. Label all numbers. 10-5—Analysis of errors (All sales and purchases are on credit.) Indicate in each of the spaces provided the effect of the described errors on the various elements of a company's financial statements. Use the following codes: O = amount is overstated; U = amount is understated; NE = no effect. Assume a periodic inventory system.
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