Purchases 300000 Purchases 300000 Less purchase discounts Less purchase

Purchases 300000 purchases 300000 less purchase

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Purchases: \$300,000 Purchases: \$300,000 Less purchase discounts: Less purchase discounts: .02 × \$240,000 = 4,800.02 × \$240,000 = 4,800Goods available 295,200 ORGoods available 295,200 Final inventory: Final inventory: 10% × \$295,200 = 29,52010% × \$300,000 = 30,000Cost of goods sold: Cost of goods sold: 90% × \$295,200 = \$265,680\$295,200 \$30,000 = \$265,200(Assuming that the \$4,800 discount is (Assuming that the \$4,800 discount is used prorated between the cost of goods sold, to reduce cost of goods sold. Final inventory 90%, and the final inventory, 10%.) is carried at the gross amount.)
Valuation of Inventories: A Cost-Basis Approach 8 - 45 Pr. 8-160Inventory methods. Jones Company was formed on December 1, 2009. The following information is available from Jones's inventory record for Product X. UnitsUnit CostJanuary 1, 2010 (beginning inventory) 1,600 \$18.00 Purchases: January 5, 2010 2,600 \$20.00 January 25, 2010 2,400 \$21.00 February 16, 2010 1,000 \$22.00 March 15, 2010 1,800 \$23.00 A physical inventory on March 31, 2010, shows 2,500 units on hand. Instructions Prepare schedules to compute the ending inventory at March 31, 2010, under each of the following inventory methods: (a) FIFO. (b) LIFO. (c) Weighted-average. Show supporting computations in good form. Solution 8-160 (a) Jones Company COMPUTATION OF INVENTORY FOR PRODUCT X UNDER FIFO INVENTORY METHOD March 31, 2010 UnitsUnit CostTotal CostMarch 15, 2010 1,800 \$23.00 \$41,400 February 16, 2010 70022.00 15,400March 31, 2010, inventory 2,500\$56,800(b) Jones Company COMPUTATION OF INVENTORY FOR PRODUCT X UNDER LIFO INVENTORY METHOD March 31, 2010 UnitsUnit CostTotal CostBeginning inventory 1,600 \$18.00 \$28,800 January 5, 2010 (portion) 90020.00 18,000March 31, 2010, inventory 2,500\$46,800
Test Bank for Intermediate Accounting, Thirteenth Edition 8 - 46 Solution 8-160(cont.) (c) Jones Company COMPUTATION OF INVENTORY FOR PRODUCT X UNDER WEIGHTED-AVERAGE INVENTORY METHOD March 31, 2010 UnitsUnit CostTotal CostBeginning inventory 1,600 \$18.00 \$ 28,800 January 5, 2010 2,600 20.00 52,000 January 25, 2010 2,400 21.00 50,400 February 16, 2010 1,000 22.00 22,000 March 15, 2010 1,80023.00 41,4009,400\$194,600Weighted average cost (\$194,600 ÷ 9,400) \$20.70March 31, 2010, inventory 2,500\$20.70\$51,750Pr. 8-161Dollar-value LIFO. Aber Company manufactures one product. On December 31, 2009, Aber adopted the dollar-value LIFO inventory method. The inventory on that date using the dollar-value LIFO inventory method was \$180,000. Inventory data are as follows: Inventory at Price index Yearyear-end prices(base year 2009)2010 \$252,000 1.05 2011 368,000 1.15 2012 387,500 1.25 Instructions Compute the inventory at December 31, 2010, 2011, and 2012,using the dollar-value LIFO method for each year. Solution 8-161 Aber Company Dollar-Value LIFO Computations At December 31, 2010, 2011, and 2012 Ending Layers at Inventory at Base-Year Ending Inventory Base-Year PricePrices Price IndexDollar-Value LIFOAt 12/31, \$252,000 ÷ 1.05 \$180,000 × 1.00 = \$180,000 2010: = \$240,000 \$60,000 × 1.05 = 63,000\$243,000At 12/31, \$368,000 ÷ 1.15 \$180,000 × 1.00 = \$180,000 2011: = \$320,000 \$60,000 × 1.05 = 63,000 \$80,000 × 1.15 = 92,000\$335,000
Valuation of Inventories: A Cost-Basis Approach 8 - 47 Solution 8-161(cont.)At 12/31, \$387,500 ÷ 1.25 \$180,000 × 1.00 = \$180,000 2012: = \$310,000 \$60,000 × 1.05 = 63,000 \$70,000 × 1.15 = 80,500\$323,500Pr. 8-162Dollar-value LIFO. Gott Company adopted the dollar-value LIFO inventory method on 12/31/09. On this date, its inventory consisted of the following items.

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