S6_PLE_Inventories - ACCTG 620 | Fall 2011 S6 PLE...

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ACCTG 620 | Fall 2011 S6 PLE Page 1 ACCTG 620 | Fall 2011 Name: _______________________ S6 PLE – Inventories Scenario: Blank Corp. (BC) sells one product, surfboard blanks, which it purchases from various suppliers around the world. BC’s trial balance at December 31, 2010, included the following accounts. Account 12/31/2010 Sales (33,000 units @ $16) $528,000 Sales discounts 7,500 Purchases 368,900 Purchase discounts 18,000 Freight-in 5,000 Freight-out 11,000 BC’s inventory purchases during the year were as follows: Units Cost per unit Total cost Beg. inventory, Jan. 1 8,000 $8.20 $ 65,600 Purchases, quarters ended March 31 12,000 8.25 99,000 June 30 15,000 7.90 118,500 September 30 13,000 7.50 97,500 December 31 7,000 7.70 53,900 Totals 55,000 $434,500 The following additional information relates BC’s inventory accounting: BC’s accounting policy is to report inventory in its financial statements at the lower of cost or market, applied to total inventory. Cost is determined using the last-in, first-out (LIFO method). BC uses a periodic inventory system. BC has determined that on December 31, 2010, the replacement cost of its inventory was
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