Accounting 305Chapter 3 HomeworkProblem 1:Damico Company purchased merchandise on September10, 2013, at a price of $20,0...
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Accounting 305
Chapter 3 Homework
Problem 1:
Damico Company purchased merchandise on September10, 2013, at a price of $20,000,
subject to credit terms of 2/10, n30. Damico uses the net method for recording purchases
and uses a perpetual inventory system.
Required: Using the accounting equation format, record:
1 Inventory purchase on September10, 2013.
2. Appropriate payment if the entire invoice is paid on September 18, 2013.
3. Appropriate payment if the entire invoice is paid on October 8, 2013.
Problem 2:
Fuller Animal Feeds has developed the following data for lower-of-cost-or-market
valuation for its inventory products (in thousands):
Cost
Large Animals:
Cattle
Horse
Small Animals:
Cat
Dog
Exotic Pets:
Ferret
Iguana
Market
$160,000
350,000
$176,000
320,000
$220,000
90,000
$280,000
66,000
$112,000
48,000
$98,000
38,500
Required: Determine the amount of inventory to appear in the balance sheet
assuming LCM applied to:
1) Individual inventory items,
2) Each of the three major categories of inventory, and
3) Inventory as a whole.
Problem 3:
Shown below is activity for product X of Jarouse Corp:
January 1 balance, 500 units @ $56 = $28,000
Purchases:
May 10: 900 units @ $60 = $54,000
November 20: 600 units @ $65 = $39,000
Sales:
April 12: 400 units @ $68 = $27,200
December 24: 1,000 units @ $75 = $75,000
Assume a periodic inventory system and a physical inventory indicates 600 units
of product X are hand at 12/31.
Required: Compute ending inventory and gross profit amounts assuming Jarouse
uses:
1) FIFO,
2) Average Cost, and
3) LIFO.
Problem 4
Latsko Inc. adopted dollar-value LIFO on December 31, 2012, when the inventory value
was $1,200,000. The December 31, 2013, ending inventory at year-end costs was
$1,430,000 and the cost index for the year is 1.1.
Required: Compute the dollar-value LIFO inventory amount to appear on the
December 31, 2013 balance sheet.
Chapter 3 Homework
Problem 1:
Damico Company purchased merchandise on September10, 2013, at a price of $20,000,
subject to credit terms of 2/10, n30. Damico uses the net method for recording purchases
and uses a perpetual inventory system.
Required: Using the accounting equation format, record:
1 Inventory purchase on September10, 2013.
2. Appropriate payment if the entire invoice is paid on September 18, 2013.
3. Appropriate payment if the entire invoice is paid on October 8, 2013.
Problem 2:
Fuller Animal Feeds has developed the following data for lower-of-cost-or-market
valuation for its inventory products (in thousands):
Cost
Large Animals:
Cattle
Horse
Small Animals:
Cat
Dog
Exotic Pets:
Ferret
Iguana
Market
$160,000
350,000
$176,000
320,000
$220,000
90,000
$280,000
66,000
$112,000
48,000
$98,000
38,500
Required: Determine the amount of inventory to appear in the balance sheet
assuming LCM applied to:
1) Individual inventory items,
2) Each of the three major categories of inventory, and
3) Inventory as a whole.
Problem 3:
Shown below is activity for product X of Jarouse Corp:
January 1 balance, 500 units @ $56 = $28,000
Purchases:
May 10: 900 units @ $60 = $54,000
November 20: 600 units @ $65 = $39,000
Sales:
April 12: 400 units @ $68 = $27,200
December 24: 1,000 units @ $75 = $75,000
Assume a periodic inventory system and a physical inventory indicates 600 units
of product X are hand at 12/31.
Required: Compute ending inventory and gross profit amounts assuming Jarouse
uses:
1) FIFO,
2) Average Cost, and
3) LIFO.
Problem 4
Latsko Inc. adopted dollar-value LIFO on December 31, 2012, when the inventory value
was $1,200,000. The December 31, 2013, ending inventory at year-end costs was
$1,430,000 and the cost index for the year is 1.1.
Required: Compute the dollar-value LIFO inventory amount to appear on the
December 31, 2013 balance sheet.
