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ACCTG 305 Chapter 3 Homework

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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                Market

Large Animals:          

              Cattle                                               $160,000         $176,000

  Horse                                                 350,000           320,000

Small Animals:

              Cat                                       $220,000         $280,000

              Dog                                          90,000             66,000

Exotic Pets:

              Ferret                                               $112,000           $98,000

              Iguana                                       48,000             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. 

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