On June 1, Delaware Co. had one unit in beginning inventory that cost $10.00. During June, Delaware paid cash to purchase two additional inventory items. Delaware purchased the first item for cash at a cost of $10.00, and the second at a cost of $12.00. Delaware Co. sold two inventory items for $24.00 each, receiving cash. Based on this information alone, indicate whether each of the following items is true or false. a) The amount of ending inventory will be $10 assuming the LIFO cost flow was used. b) Cost of goods sold would be $24 assuming the weighted average cost flow was used. c) Cash flow from operating activities in June would be $28 assuming a FIFO cost flow was used. d) Cash flow from operating activities in June would be $26 independent of what cost flow assumption was used. e) The amount of gross margin would be $26 assuming the FIFO cost flow was used.

On June 1, Delaware Co. had one unit in beginning inventory that cost $10.00. During June, Delaware paid cash to purchase two additional inventory items. Delaware purchased the first item for cash at a cost of $10.00, and the second at a cost of $12.00. Delaware Co. sold two inventory items for $24.00 each, receiving cash. Based on this information alone, indicate whether each of the following items is true or false. a) The amount of ending inventory will be $10 assuming the LIFO cost flow was used. b) Cost of goods sold would be $24 assuming the weighted average cost flow was used. c) Cash flow from operating activities in June would be $28 assuming a FIFO cost flow was used. d) Cash flow from operating activities in June would be $26 independent of what cost flow assumption was used. e) The amount of gross margin would be $26 assuming the FIFO cost flow was used.

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter13: Accounting For Merchandise Inventory

Section: Chapter Questions

Problem 1MP: Hurst Companys beginning inventory and purchases during the fiscal year ended December 31, 20-2,...

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Hurst Companys beginning inventory and purchases during the fiscal year ended December 31, 20-2, were as follows: There are 1,200 units of inventory on hand on December 31, 20-2. REQUIRED 1. Calculate the total amount to be assigned to the cost of goods sold for 20-2 and ending inventory on December 31 under each of the following periodic inventory methods: (a) FIFO (b) LIFO (c) Weighted-average (round calculations to two decimal places) 2. Assume that the market price per unit (cost to replace) of Hursts inventory on December 31 was 18. Calculate the total amount to be assigned to the ending inventory on December 31 under each of the following methods: (a) FIFO lower-of-cost-or-market (b) Weighted-average lower-of-cost-or-market 3. In addition to taking a physical inventory on December 31, Hurst decides to estimate the ending inventory and cost of goods sold. During the fiscal year ended December 31, 20-2, net sales of 100,000 were made at a normal gross profit rate of 35%. Use the gross profit method to estimate the cost of goods sold for the fiscal year ended December 31 and the inventory on December 31.
Jessie Stores uses the periodic system of calculating inventory. The following information is available for December of the current year when Jessie sold 500 units of inventory. Using the FIFO method, calculate Jessies inventory on December 31 and its cost of goods sold for December. RE7-11 Using the information from RE7-10, calculate Jessie Storess inventory on December 31 and its cost of goods sold for December using the LIFO method.
Marigold Corp. uses a perpetual inventory system. The company had the following inventory transactions in April. April 3 Purchased merchandise from DeVito Ltd. for $33,000, terms 2/10, n/30, FOB shipping point. The appropriate company paid freight costs of $750 on the merchandise purchased on April 3. Purchased supplies on account for $5,400. Returned merchandise to DeVito and received a credit of $4,200. The merchandise was returned to inventory for future resale. 6 7 30 Paid the amount due to DeVito in full.
On June 1 of the current year, Zeta Corp. recorded purchases of inventory of P 800,000 and P 1,000,000 under credit terms 2/15, net 30. The payment due on the P 800,000 purchase was remitted on June 16. The payment due on the P 1,000,000 purchase was remitted on June 31. Under the net method and the gross method, these purchases should be included at what respective amounts in the determination of cost of goods available for sale? Net Method P 1,784,000 1,764,000 Gross Method P 1,764,000 А. В. 1,800,000 С. 1,764,000 1,800,000 1,784,000 1,764,000 D.
Tetra Company purchased 2,100 units of Inventory that cost $2.50 each on January 1, Year 1. An additional 3,100 units of Inventory were purchased on January 12, Year 1 at a cost of $2.35 each. Tetra Company sold 4,100 units of Inventory on January 20, Year 1. Assuming that Tetra Company uses the perpetual Inventory method and a FIFO flow method, how would the entry to recognize the cost of goods sold affect the financial statements? Multiple Choice O Increase Inventory and increase cost of goods sold by $10,050 Increase cost of goods sold and decrease Inventory by $9.950 Increase Inventory and Increase cost goods sold by $9,950 Decrease cost of goods sold and increase Inventory by $10,050
Sarasota Corp. uses a perpetual inventory system. The company had the following inventory transactions in April: April 3 Purchased merchandise from DeVito Ltd. for $24,080, terms n/30, FOB shipping point. The appropriate company paid freight costs of $602 on the merchandise purchased on April 3. Purchased supplies on account for $4,300. Returned merchandise to DeVito and received a credit of $3,010. The merchandise was returned to inventory for future resale. Paid the amount due to DeVito in full. 6 here to search 7 8 30 Record the above transactions in Sarasota's books. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit 18°C Sunny
Two different companies, Vogel Corporation and Hatcher Corporation, entered into the following inventory transactions during December. Both companies use a perpetual inventory system using the gross method of recording sales discounts. • December 3 - Vogel Corporation sold inventory on account to Hatcher Corporation for $481,000, terms 2/10, n/30. This inventory originally cost Vogel $313,000. December 8 - Hatcher Corporation returned inventory to Vogel Corporation for a credit of $3,300. Vogel returned this inventory to inventory at its original cost of $2,147. • December 12 - Hatcher Corporation paid Vogel Corporation for the amount owed. Required: a. Prepare the journal entries to record these transactions on the books of Vogel Corporation. b. What is the amount of net sales to be reported on Vogel Corporation's income statement? c. What is the Vogel Corporation's gross profit percentage?
Bramble Corp. uses the perpetual inventory and the gross method. On March 1, it purchased $ 54000 of inventory, terms 2/10, n/30. On March 3, Bramble returned goods that cost $ 5400. On March 9, Bramble paid the supplier. On March 9, Bramble should credit a) purchase discounts for $ 1080. b) purchase discounts for $ 972. c) inventory for $ 972. d) inventory for $ 1080.
On June 10, Cullumber Company purchased $7,300 of merchandise from Oriole Company, terms 3/10, n/30. Cullumber Company pays the freight costs of $360 on June 11. Goods totaling $500 are returned to Oriole Company for credit on June 12. On June 19, Cullumber Company pays Oriole Company in full, less the purchase discount. Both companies use a perpetual inventory system. Prepare separate entries for each transaction for Oriole Company. The merchandise purchased by Cullumber Company on June 10 cost Oriole Company $2,400, and the goods returned cost Oriole Company $210. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit choose a transaction date enter…
Crane Corporation uses the perpetual inventory system and began business on April 1. During the month Crane made inventory purchases of $84,200 on terms of 3/10, n/30. Crane returned $4,500 worth of goods during the month. Crane made all payments in time to take advantage of the offered cash discounts during the month. Crane sold inventory on account with a value of $72,200 and a markup of 30% on the cost. These were the only inventory transactions during the month. Leo uses the gross method in accounting for cash discounts. Prepare the journal entries related to: (a) Prepare the journal entry related to the purchase of goods. (List debit entry before credit entry. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit
Autumn Company began the month of October with inventory of $29,000. The following inventory transactions occurred during the month: The company purchased inventory on account for $43,000 on October 12. Terms of the purchase were 310/310 , n30/�30 . Autumn uses the net method to record purchases. The inventory was shipped f.o.b. shipping point and freight charges of $640 were paid in cash. On October 31, Autumn paid for the inventory purchased on October 12. During October inventory costing $20,100 was sold on account for $30,800. It was determined that inventory on hand at the end of October cost $51,250.
A corporation which uses a perpetual inventory syste, purchased $3,000 of merchandise on account on July 5. Credit terms were 2/10, n/30. The compnay returend $600 of the merchandise on July 9th. The company paid off the bill on July 11. The amoutn credited to inventory to record the payment would equal $_________ (Expressed in whole dollars)