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P6-1A Kirk Limited is trying to determine the value of its ending
inventory as of February 28, 2012, the company’s year-end. The accountant
counted everything that was in the warehouse, as of February 28, which
resulted in an ending inventory valuation of $48,000. However, she didn’t
know how to treat the following transactions so she didn’t record them.
Determine items and amounts to be recorded in inventory.
(SO 1), AN
(a) On February 26, Kirk shipped to a customer goods costing $800. The
goods were shipped FOB shipping point, and the receiving report indicates
that the customer received the goods on March 2. Should not be included in
inventory, the legal right is of buyer.
(b) On February 26, Seller Inc. shipped goods to Kirk FOB destination. The
invoice price was $350 plus $25 for freight. The receiving report indicates
that the goods were received by Kirk on March 2. Should not be included in
inventory as legal right is with seller
(c) Kirk had $500 of inventory at a customer’s warehouse “on approval.”
The customer was going to let Kirk know whether it wanted the merchandise
by the end of the week, March 4. Should be included in the inventor as the
goods have not been shipped
(d) Kirk also had $400 of inventory at a Balena craft shop, on consignment
from Kirk. Should be included in inventory as the legal right is with consignor.
(e) On February 26, Kirk ordered goods costing $750. The goods were
shipped FOB shipping point on February 27. Kirk received the goods on
March 1. Should be included in inventory s legal right with the buyer
(f) On February 28, Kirk packaged goods and had them ready for shipping
to a customer FOB destination. The invoice price was $350 plus $25 for
freight; the cost of the items was $280. The receiving report indicates that
the goods were received by the customer on March 2. Should be included in
inventory as legal right with the seller.
(g) Kirk had damaged goods set aside in the warehouse because they are
no longer saleable. These goods originally cost $400 and, originally, Kirk
expected to sell these items for $600. Should be included in inventory as it
has market value.
Instructions
For each of the above transactions, specify whether the item in question
should be included in ending inventory, and if so, at what amount. For each

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item that is not included in ending inventory, indicate who owns it and what
account, if any, it should have been recorded in.
P6-2A Turner Distribution markets CDs of numerous performing artists. At
the beginning of March, Turner had in beginning inventory 2,500 CDs with a
unit cost of $7. During March, Turner made the following purchases of CDs.
Determine cost of goods sold and ending inventory using FIFO, LIFO, and
average-cost with analysis.
(SO 2,3), AP
March 5 2,000 @ $8
March 13 3,500 @ $9
March 21 5,000 @ $10
March 26 2,000 @ $11
During March 12,000 units were sold. Turner uses a periodic inventory
system.
Instructions
(a) Determine the cost of goods available for sale.
(b) Determine (1) the ending inventory and (2) the cost of goods sold
under each of the assumed cost <ow methods (FIFO, LIFO, and average-
cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO
methods. (Note: For average-cost, round cost per unit to three decimal
places.)

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P6-1AKirk Limited is trying to determine the value of its ending inventory as of February 28, 2012, the company's year-end. The accountant counted everything that was in the warehouse, as of February 28, which resulted in an ending inventory valuation of $48,000. However, she didn't know how to treat the following transactions so she didn't record them.Determine items and amounts to be recorded in inventory.(SO 1), AN(a)On February 26, Kirk shipped to a customer goods costing $800. The goods were shipped FOB shipping point, and the receiving report indicates that the customer received the goods on March 2. Should not be included in inventory, the legal right is of buyer.(b)On February 26, Seller Inc. shipped goods to Kirk FOB destination. The invoice price was $350 plus $25 for freight. The receiving report indicates that the goods were received by Kirk on March 2. Should not be included in inventory as legal right is with seller(c)Kirk had $500 of inventory at a customer's warehouse "on approval." The customer was going to let Kirk know whether it wanted the merchandise by the end of the week, March 4. Should be included in the inventor as the goods have not been shipped(d)Kirk also had $400 of inventory at a Balena craft shop, on consignment from Kirk. Should be included in inventory as the legal right is with consignor.(e)On February 26, Kirk ordered goods costing $750. The goods were shipped FOB shipping point on February 27. Kirk received the goods on March ...
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