retail inventory method, Gross Profit method.
Okay, I provided a working papers template for this problem. The only thing I didn’t include was a standard journal entry template. You will have to provide that for me to make all of the entries. This consists of about five small problems. Take a look at the attachments to get a feel for the assignment. If you need anymore information please feel free to contact me. The most important thing I expect is for the assignment to be into me on time. Please be accurate. Your services are appreciated. Have a great day.
The following were selected from among the transactions completed by Calworks Company during April of the current year:
Apr. 3. Purchased merchandise on account from Prescott Co., list price $42,000, trade discount 40%, terms FOB destination, 2/10, n/30
4. Sold merchandise for cash, $18,200. The cost of the merchandise sold was $11,000.
5. Purchased merchandise on account from Stafford Co., $21,300, terms FOB shipping point, 2/10, n/30 with prepaid freight of $600 added to the invoice.
6. Returned $6,000 of merchandise purchased on April 3 from Prescott Co.
11. Sold merchandise on account to Logan Co., list price $8,500, trade discount 20%, terms 1/10, n/30. The cost of merchandise sold was $4,500.
13. Paid Prescott Co. on account for purchase of April 3, less return of April 6 and discount.
14. Sold merchandise on VISA, $60,000. The cost of the merchandise sold was $36,000.
15. Paid Stafford Co. on account for the purchase of April 5, less discount.
21. Received cash on account from sale of April 11 to Logan Co., less discount.
24. Sold merchandise on account to Alma Co. $9,200, terms 1/10, n/30. The cost of merchandise sold was $5,500.
28. Paid VISA service fee of $1,800.
30. Received merchandise returned by Alma Co. from sale on April 24, $1,200. The cost of returned merchandise was $720.
****Instructions
Journalize the transactions
Next set of questions to be done separately***********
2. FIFO, LIFO costs under perpetual inventory system.
The following units of particular item were available for sale during the year:
Beginning Inventory 150 units at $75.
Sale
120 units at $125.
First purchase 400 units at $78.
Sale 200 units at $125.
Second purchase 300 units at $80.
Sale 290 units at $125.
The firm uses the perpetual inventory system, and there are 240 units of the item on hand at the end of the year. What is the total cost of the ending inventory according to (a) FIFO, (b) LIFO?
3. Periodic inventory by three methods
The units of an item available for sale during the year were as follows:
Jan. 1 Inventory 27 units at $120
Feb. 17 Purchase 54 units at $138
July. 21 Purchase 63 units at $156
Nov. 23 Purchase 36 units at $165
There are 50 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost by (a) the first-in, first-out method, (b) the last in, first-out method, and (c) the average cost method.
3. Gross Profit method
Based on the following data, estimate the cost of ending merchandise inventory:
Sales (net) $ 4,800,000
Estimated gross profit rate 40%
Beginning merchandise inventory $ 250,000
Purchases (net) 2,900,000
Merchandise available after sale $3,150,000
4. Retail Inventory Method
On the basis of the following data, estimate the cost of the merchandise inventory at April 30 by retail method:
Cost Retail
——————————————————————————————————————————–
April 1 Merchandise Inventory $180,000 $300,000
April 1—30 Purchases (net) 1,200,000 2,000,000
April 1—30 Sales (net) 2,025,000
2.
(No template needed)
a.
b.
3.
(No template needed)
a.
b.
c.
4.
Merchandise available for sale
Less cost of merchandise sold
Estimated ending merchandise inventory $
5.
Cost
Retail
Merchandise inventory, April 1
$ 180,000
$ 300,000
Purchases in April (net)
1,200,000
2,000,000
Merchandise available for sale
Ratio of cost to retail price:
=
Sales for September (net)
Merchandise inventory, April 30, at retail
Multiply by ratio of cost to retail price:
x
Merchandise inventory, April 30, at estimated cost
1: The ending merchandise inventory for 2007 is the same as the beginning merchandise inventory for 2008.
True
False
2: If merchandise costing 2,500 dollars, terms FOB destination, 2/10, n/30, with prepaid transportation costs of 100 dollars, is paid within 10 days, the amount of the purchases discount is 50 dollars.
Also an example in the lecture notes. 2500 x .02 = $50.
True
False
3: Under the periodic inventory system, the merchandise inventory account continuously discloses the amount of inventory on hand.
True
False
4: From PR 6-5B, which of the following journal entries is correct for April 3?
a. (Debit) Merchandise Inventory 25,200 dollars
(Credit) Accounts Payable—Prescott Co. 25,200 dollars
b. (Debit) Merchandise Inventory 42,200 dollars
(Credit) Accounts Payable—Prescott Co.$42,200 dollars
c. (Debit) Merchandise Inventory 25,000 dollars
(Credit) Accounts Payable—Prescott Co. 25,000 dollars
d. (Debit) Merchandise Inventory 42,000 dollars
(Credit) Accounts Payable—Prescott Co. 42,000 dollars
5: From PR 6-5B, which of the following journal entries is correct for April 24?
a. (Debit) Accounts Receivable—Alma Co.8,200 dollars
(Credit) Sales 8,200 dollars
b. (Debit) Accounts Receivable—Alma Co.9,200 dollars
(Credit) Sales 9,200 dollars
c. (Debit) Accounts Receivable—Alma Co.10,200 dollars
(Credit) Sales 10,200 dollars
d. (Debit) Sales 9,200 dollars
(Credit) Accounts Receivable—Alma Co.9,200 dollars
6: From EX 7-7, the total cost of ending inventory according to (a) FIFO is:
a. 19,000 dollars
b. 19,100 dollars
c. 19,200 dollars
d. 19,300 dollars
7: From EX 7-8, the inventory cost by (b) the LIFO method is:
a. 6,515 dollars
b. 6,313 dollars
c. 6,715 dollars
d. 6,414 dollars
8: From EX 7-8, the inventory cost by (C) the Average Cost method is:
a. 7,250 dollars
b. 7,350 dollars
c. 7,360 dollars
d. 7,390 dollars
9: Appendix EX 7-19, the April 30 cost of merchandise inventory is:
a. 161,000 dollars
b. 163,000 dollars
c. 165,000 dollars
d. 167,000 dollars
10: Appendix EX 7-21, estimated ending merchandise inventory is:
a. 270,000 dollars
b. 271,000 dollars
c. 272,000 dollars
d. 273,000 dollars
