# Determine ending inventory under lcm so 4 compute

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Determine ending inventory under LCM. (SO 4) Compute lower-of-cost-or- market. (SO 4) Prepare correct income statements. (SO 5) Determine effects of inventory errors. (SO 5) PDF Watermark Remover DEMO : Purchase from to remove the watermark

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Instructions (a) Prepare correct income statement data for the 2 years. (b) What is the cumulative effect of the inventory error on total gross profit for the 2 years? (c) Explain in a letter to the president of Staley Company what has happened—i.e., the nature of the error and its effect on the financial statements. E6-13 This information is available for Santo’s Photo Corporation for 2009, 2010, and 2011. Exercises 285 Instructions Calculate inventory turnover, days in inventory, and gross profit rate (from Chapter 5) for Santo’s Photo Corporation for 2009, 2010, 2011. Comment on any trends. E6-14 The cost of goods sold computations for O’Brien Company and Weinberg Company are shown below. 2009 2010 2011 Beginning inventory \$ 100,000 \$ 300,000 \$ 400,000 Ending inventory 300,000 400,000 480,000 Cost of goods sold 900,000 1,120,000 1,300,000 Sales 1,200,000 1,600,000 1,900,000 O’Brien Company Weinberg Company Beginning inventory \$ 45,000 \$ 71,000 Cost of goods purchased 200,000 290,000 Cost of goods available for sale 245,000 361,000 Ending inventory 55,000 69,000 Cost of goods sold \$190,000 \$292,000 Instructions (a) Compute inventory turnover and days in inventory for each company. (b) Which company moves its inventory more quickly? *E6-15 Klugman Appliance uses a perpetual inventory system. For its flat-screen television sets, the January 1 inventory was 3 sets at \$600 each. On January 10, Klugman purchased 6 units at \$660 each.The company sold 2 units on January 8 and 4 units on January 15. Instructions Compute the ending inventory under (1) FIFO, (2) LIFO, and (3) moving-average cost. *E6-16 Yount Company reports the following for the month of June. Date Explanation Units Unit Cost Total Cost June 1 Inventory 200 \$5 \$1,000 12 Purchase 300 6 1,800 23 Purchase 500 7 3,500 30 Inventory 120 Instructions (a) Calculate the cost of the ending inventory and the cost of goods sold for each cost flow as- sumption, using a perpetual inventory system. Assume a sale of 400 units occurred on June 15 for a selling price of \$8 and a sale of 480 units on June 27 for \$9. (b) How do the results differ from E6-6 and E6-8? (c) Why is the average unit cost not \$6 [(\$5 H11001 \$6 H11001 \$7) H11004 3 = \$6]? *E6-17 Information about Boarders is presented in E6-4.Additional data regarding Boarders’ sales of Xpert snowboards are provided below.Assume that Boarders uses a perpetual inventory system. Compute inventory turnover, days in inventory, and gross profit rate. (SO 6) Compute inventory turnover and days in inventory. (SO 6) Apply cost flow methods to perpetual records. (SO 7) Apply cost flow methods to perpetual records. (SO 7) Calculate inventory and cost of goods sold using three cost flow methods in a perpetual inventory system.
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