# B which costing method produces the highest ending

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(b) Which costing method produces the highest ending inventory valuation? *P6-10B O’Reilly Company lost all of its inventory in a fire on December 26, 2010. The accounting records showed the following gross profit data for November and December. December November (to 12/26) Net sales \$600,000 \$700,000 Beginning inventory 32,000 36,000 Purchases 377,000 424,000 Purchase returns and allowances 13,300 14,900 Purchase discounts 8,500 9,500 Freight-in 8,800 9,900 Ending inventory 36,000 ? O’Reilly is fully insured for fire losses but must prepare a report for the insurance company. Instructions (a) Compute the gross profit rate for November. (b) Using the gross profit rate for November, determine the estimated cost of the inventory lost in the fire. *P6-11B Fond du Lac Books uses the retail inventory method to estimate its monthly ending inventories.The following information is available for two of its departments at October 31,2010. Compute ending inventory using retail method. (SO 8) Gross profit: LIFO \$2,020 FIFO \$2,420 Average \$2,272 Determine ending inventory under a perpetual inventory system. (SO 7) (a) Ending inventory FIFO \$1,029 Avg. \$994 LIFO \$958 Compute gross profit rate and inventory loss using gross profit method. (SO 8) PDF Watermark Remover DEMO : Purchase from to remove the watermark

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B R O A D E N I N G Y O U R P E R S P E C T I V E FINANCIAL REPORTING AND ANALYSIS Financial Reporting Problem: PepsiCo, Inc. BYP6-1 The notes that accompany a company’s financial statements provide informative de- tails that would clutter the amounts and descriptions presented in the statements. Refer to the financial statements of PepsiCo, Inc. and the Notes to Consolidated Financial Statements in Appendix A. At December 31, Fond du Lac Books takes a physical inventory at retail.The actual retail values of the inventories in each department are Hardcovers \$790,000 and Paperbacks \$335,000. Instructions (a) Determine the estimated cost of the ending inventory for each department at October 31 , 2010, using the retail inventory method. (b) Compute the ending inventory at cost for each department at December 31 , assuming the cost-to-retail ratios for the year are 65% for hardcovers and 75% for paperbacks. Broadening Your Perspective 295 Hardcovers Paperbacks Cost Retail Cost Retail Beginning inventory \$ 420,000 \$ 700,000 \$ 280,000 \$ 360,000 Purchases 2,135,000 3,200,000 1,155,000 1,540,000 Freight-in 24,000 12,000 Purchase discounts 44,000 22,000 Net sales 3,100,000 1,570,000 Visit the book’s companion website at , and choose the Student Companion site, to access Problem Set C. PROBLEMS: SET C w w w . w i l e y . c o m / c o l l e g e / w e y g a n d t ( Note: This is a continuation of the Cookie Chronicle from Chapters 1 through 5.) CCC6 Natalie is busy establishing both divisions of her business (cookie classes and mixer sales) and completing her business degree. Her goals for the next 11 months are to sell one mixer per month and to give two to three classes per week.
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