Chapter 09 Solution - Exercise 9-1 Requirement 1(1(2...

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Exercise 9-1 Requirement 1 (1) (2) (3) (4) (5) Product RC Ceiling NRV Floor NRV-NP (NP= 25% of cost) Designated Market Value [Middle value of (1), (2) & (3)] Cost Inventory Value [Lower of (4) and (5)] GBP GBP GBP GBP GBP GBP 101 110,000 100,000 70,000 100,000 120,000 100,000 102 85,000 110,000 87,500 87,500 90,000 87,500 103 40,000 50,000 35,000 40,000 60,000 40,000 104 28,000 50,000 42,500 42,500 29,000 29,000 Totals 299,000 256,500 The inventory value is GBP 256,500 . Requirement 2 Loss from write-down of inventory: 299,000 - 256,500 = 42,500 1
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Exercise 9-3 Beginning inventory (from records) $100,000 Plus: Net purchases (from records) 140,000 Cost of goods available for sale 240,000 Less: Cost of goods sold: Net sales $220,000 Less: Estimated gross profit of 35% (77,000 ) Estimated cost of goods sold (143,000 ) Estimated ending inventory 97,000 Less: Value of usable damaged goods (12,000 ) Estimated loss from fire $ 85,000 Exercise 9-6 MXN Merchandise inventory, January 1, 2006 3,000,000 Purchases 5,800,000 Freight-in 400,000 Cost of goods available for sale 9,200,000 Less: Cost of goods sold: Sales 8,200,000 Less: Estimated gross profit of 20% (1,640,000 ) (6,560,000 ) Estimated loss from fire 2,640,000 Exercise 9-8 Cost Retail BOB Beginning inventory 35,000 50,000 Plus: Net purchases 19,120 31,600 Net markups 1,200 Less: Net markdowns ______ (800 ) Goods available for sale 54,120 82,000 2
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54,120 Cost-to-retail percentage: = 66% 82,000 Less: Net sales (30,000 ) Estimated ending inventory at retail 52,000 Estimated ending inventory at cost (66% x 52,000) (34,320 ) Estimated cost of goods sold 19,800 3
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Exercise 9-10 Cost Retail CLP Beginning inventory 160,000 280,000 Plus: Net purchases 607,760 840,000 Net markups 20,000 Less: Net markdowns _______ (4,000 ) Goods available for sale (excluding beg. Inventory) 607,760 856,000 Goods available for sale (including beg. Inventory) 767,760 1,136,000 607,760 Cost-to-retail percentage: = 71% 856,000 Less: Net sales (786,000 ) Estimated ending inventory at retail 350,000 Estimated ending inventory at cost: Retail Cost Beginning inventory 280,000 160,000 Current period’s layer 70,000 x 71% = 49,700 Total 350,000 209,700 (209,700 ) Estimated cost of goods sold 558,060 4
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Exercise 9-21 1. To include the CHF 3 million in year 2006 purchases and increase retained earnings to what it would have been if 2005 cost of goods sold had not included the CHF 3 million purchases.
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