Essay Ch 9 notes

Submitted By Jared-Duffield
Words: 312
Pages: 2

CHAPTER 9

Inventories: Additional Valuation Issues

EXERCISE 9-1 (15–20 minutes)

Per Unit

Lower-of-

Part No.

Quantity

Cost

Market

Total Cost

Total Market

Cost-or-Market
110

600

$ 90

$100.00

$ 54,000

$ 60,000

$ 54,000
111

1,000

60

52.00

60,000

52,000

52,000
112

500

80

76.00

40,000

38,000

38,000
113

200

170

180.00

34,000

36,000

34,000
120

400

205

208.00

82,000

83,200

82,000
121

1,600

16

0.20

25,600 320

320
122

300

240

235.00

72,000

70,500

70,500
Totals

$367,600

$340,020

$330,820

(a) $330,820.

(b) $340,020.

EXERCISE 9-7 (15–20 minutes)

Cost Per Lot
(Cost Allocated/
No. of Lots)
$2,100
2,800 1,680

Cost Allocated to Lots
$18,900
42,000 28,560
$89,460

Total
Cost
$89,460 89,460 89,460

X
X
X

Relative Sales Price
$27,000/$127,800
$60,000/$127,800
$40,800/$127,800

$80,000 56,000 24,000 18,200 $ 5,800

Gross
Profit
$ 3,600 9,600 10,800 $24,000

Total
Sales Price
$ 27,000 60,000 40,800
$127,800

Sales revenue (see schedule)
Cost of goods sold (see schedule)
Gross profit
Operating expenses Net income

Sales
$12,000
32,000 36,000 $80,000

Sales
Price Per Lot
$3,000
4,000 2,400

Cost Cost of Per Lots Lot Sold
$2,100 $ 8,400 2,800 22,400 1,680 25,200 $56,000

No. of Lots

9
15
17

Number of Lots Sold* 4 8
15
27

* 9 – 5 = 4 15 – 7 = 8 17 – 2 = 15

Group 1
Group 2
Group 3

Group 1
Group 2
Group 3 Total

EXERCISE 9-14

Beginning inventory

$170,000
Purchases

390,000

560,000
Purchase returns

(30,000)
Goods available (at cost)

530,000
Sales revenue
$650,000

Sales returns (24,000)

Net sales
626,000

Less: Gross profit (40% X $626,000) (250,400) 375,600
Estimated ending inventory (unadjusted for damage)

154,400
Less: Goods on hand—undamaged (at cost) $21,000 X (1 – 40%)

(12,600)
Less: Goods on hand—damaged (at net realizable value)

(5,300)
Fire loss on inventory

$136,500

EXERCISE 9-19 (12–17 minutes)

Cost

Retail
Beginning inventory
$ 200,000

$ 280,000
Purchases
1,375,000

2,140,000 Totals 1,575,000

2,420,000
Add: Net markups

Markups

$95,000

Markup cancellations
_________
(15,000) 80,000
Totals
$1,575,000

2,500,000

Deduct: Net markdowns

Markdowns

35,000

Markdowns cancellations

(5,000) 30,000
Sales price of goods available

2,470,000
Deduct: Sales revenue

2,200,000
Ending inventory at retail

$ 270,000

Cost-to-retail ratio =
$1,575,000
= 63%

$2,500,000

Ending inventory at cost = 63% X $270,000 = $170,100

PROBLEM 9-5

STANISLAW CORPORATION
Computation of Inventory Fire Loss
April 15, 2015
Inventory, 1/1/15

$ 75,000
Purchases, 1/1/ – 3/31/15

52,000
April merchandise shipments paid

3,400
Unrecorded purchases on account

15,600 Total…