Review - Class Review Exercise 5-11: Inventory Costing...

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Class Review
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Exercise 5-11: Inventory Costing Methods VanderMeer Inc. reported the following information for the month of February: Inventory, February 1 65 units @ $20 Purchases: February 7 50 units @ $22 February 18 60 units @ $23 February 27 45 units @ $24 During February, VanderMeer sold 140 units. The company uses a periodic inventory system. Required What is the value of ending inventory and cost of goods sold for February under the following assumptions: 1. Of the 140 units sold, 55 cost $20, 35 cost $22, 45 cost $23, and 5 cost $24.
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1. Ending inventory: (65 – 55) × $20 = $200 (50 – 35) × $22 = 330 (60 – 45) × $23 = 345 (45 – 5 ) × $24 = 960 80 units $1,835 Cost of goods sold: 55 × $20 = $1,100 35 × $22 = 770 45 × $23 = 1,035 5 × $24 = 120
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2. Ending inventory: 45 × $24 = $1,080 35 × $23 = 805 80 units $1,885 Cost of goods sold: 65 × $20 = $1,300 50 × $22 = 1,100 25 × $23 = 575 140 units $2,975
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3. Ending inventory: 65 × $20 = $1,300 15 × $22 = 330 80 units $1,630 Cost of goods sold: 45 × $24 = $1,080 60 × $23 = 1,380 35 × $22 = 770 140 units $3,230
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4. Cost of goods available for sale and units available: 65 × $20 = $1,300 50 × $22 = 1,100 60 × $23 = 1,380 45 × $24 = 1,080 220 units $4,860 Weighted average cost = $4,860/220 = $22.09/unit Ending inventory: 80 × $22.09 = $1,767.20
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Problem 6-1: Bank Reconciliation The following information is available to assist you in preparing a bank reconciliation for Calico Corners on May, 31, 2008: a. The balance on the May 31, 2008, bank statement is $8,432.11. b. Not included on the bank statement is a $1,250.00 deposit made by Calico Corners late on May 31. c. A comparison between the cancelled checks returned with the bank statement and the company records indicated that the following checks are outstanding at May 31: No. 123 $ 23.40 No. 127 145.00 No. 128 210.80 No. 130 67.32 d. The Cash account on the company’s books shows a balance of $9,965.34. e. The bank acts as a collection agency for interest earned on some municipal bonds held by Calico Corners. The May bank statement indicates interest of $465.00 earned during the month.
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g. A customer’s NSF check in the amount of $166.00 was returned with the May bank statement. h. A comparison between the deposits listed on the bank statement and the company’s books revealed that a customer’s check in the amount of $123.45 was recorded on the books during May but was never added to the company’s account. The bank erroneously added the check to the account of Calico Closet, which has an account at the same bank. i. The comparison of deposits per the bank statement with those per the books revealed that another customer’s check in the amount of $101.10 was correctly added to the company’s account. In recording the check on the company’s books, however, the accountant erroneously increased the Cash account $1,011.00. Required
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This note was uploaded on 02/20/2012 for the course MGMT 200 taught by Professor Greigg during the Fall '08 term at Purdue.

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Review - Class Review Exercise 5-11: Inventory Costing...

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