Accounting chapter 7 inventories answers
Chapter 7, accounts receivable, introduction
EXERCISES EXERCISES EXERCISES EXERCISES EXERCISES Since store managers will be able to keep track of how much of each item is left after switching to a perpetual inventory system, A4A Hardware’s internal inventory controls will be strengthened.
1 1 2 1 2 1 2 1 2 1 2 1 2 1 2 1 2 1 2 1 2 1 After reading this chapter, you should be able to: 1. Explain why inventory management is important. 2. Explain the effect of three inventory cost flow assumptions on the revenue.
INVENTORY VALUATION’S Significance INVENTORY VALUATION’S IMPORTANCE INVENTORY VALUATION’S IMPORTANCE INVENTORY Inventory is often the most important current asset on the balance sheet. Inventory is essential in assessing the effects on the income statement.
C Inventories and Cost of Products Sold H A P T E R 9 Merchandising firms purchase and sell a wide range of goods in large quantities. These practices result in difficult accounting concerns when it comes to estimating income.
1 Inventories (Chapter 6) 2 goals for learning 1. Describe and classify the inventory items as of the reporting date. 2. Determine the s that should be included in the inventory value. 3. Describe the four categories.
Fifo inventory method
Card Corp. signed a three-year, noncancelable purchasing contract with Hart Supply Co. on January 1, Year 4, enabling Card to purchase up to 500,000 units of a computer component annually. The contract stipulates a minimum annual procurement of 100,000 units at a cost of $.10 per unit. During Year 4, the component became redundant for no apparent reason. At the end of Year 4, Card had 250,000 units of this inventory and claims that these parts can be sold as scrap for $.02 per unit. In its fourth-year income statement, how much of the probable loss from the purchase pledge should Card report? A. On May 1, a flash flood swept through Hat, Inc.’s warehouse. Hat’s financial documents after the flood revealed the following: 35,000 dollars in inventory on January 1st Purchases made from January 1 to May 31 totaled $1200,000. Sales from January 1 to May 1 totaled 1250,000. Inventory was not harmed by the flood. 30,000 people 40 percent gross profit margin on revenue How much inventory was destroyed by the flood? A. pattern of action: Iba Co. signed a deal with a customer on November 1st, Year 1 to sell 150 devices for $75 each. At the start of the deal, the customer takes care of the equipment. Each computer from Iba costs $45. Iba allows customers to return every unused computer for a complete refund within one year of purchase. To estimate the variable under consideration, Iba employs the expected value process. Based on Iba’s experience and other related factors, it is reasonable to expect a total of 20 machines to be returned (12 in Year 1 and 8 in Year 2). Iba predicts that (1) the devices will be returned in sellable condition and (2) the costs of retrieving them will be minimal. In the first year, ten computers were returned. Iba continues to predict that a total of 20 computers will be returned within one year of the selling date at the end of Year 1. 4th question
Chapter 6, video 1, solving a fifo problem
Chapter 8 specifies the objects that should be included in inventory, as well as how to handle goods in transit and consigned goods. Furthermore, the total cost of products available for sale (beginning inventory plus purchases) must be divided between ending inventory and cost of goods sold. This necessitates the use of a costing strategy. First-in, first-out (FIFO), last-in, first-out (LIFO), and weighted average are some of the methods used. – of these techniques is explained in the chapter and assigns cost to units based on an expected cost flow pattern. Inventory costing may be done on a regular, weekly, or monthly basis.
In addition to assigning costs to units, it’s also important to determine if inventory value has been harmed. This necessitates the use of lower of cost or net realizable value testing, which ensures that inventory is not registered at a higher cost than it would produce from a sale. The chapter goes on to look at the gross profit method for estimating inventory and the retail method, which can be very useful if certain requirements are met. The chapter ends with a discussion of inventory management, inventory turnover ratios, and error consequences.
Accounting chapter 7 2 preapring a balance sheet
On December 15, Monson sells 28 units for $10 each. Monson uses a method of perpetual inventory. When costs are allocated using the weighted average process, determine the costs assigned to ending inventory. (Round to two decimal places your per-unit costs.)
On December 15, Monson sells 28 units for $10 each. 14 of the units sold were purchased on December 7th, and 14 were purchased on December 14th. Monson uses a method of perpetual inventory. When costs are allocated based on precise identification, determine the costs assigned to the December 31 ending inventory.
A perpetual inventory system is used by the company. Ending inventory consists of 300 units for precise identification, with 280 from the January 30 purchase, 5 from the January 20 purchase, and 15 from beginning inventory.
1. Using precise identification, complete the table to assess the cost attributed to ending inventory and the cost of products sold.
2. Using a weighted average, determine the expense assigned to ending inventory and cost of products sold.
3. Using FIFO, calculate the cost allocated to ending inventory and cost of products sold.
4. Using LIFO, assess the cost allocated to ending inventory and cost of products sold.