Question 1 In your audit of Tony Company, you find that a physical inventory on December 31, 2017, showed merchandise with a cost of $400,350 was on hand at that date. You also discover the following items were all excluded from the $400,350. 1. Merchandise of $63,540 which is held by Tony on consignment. The consignor is the Max Suzuki Company. 2. Merchandise costing $39,530 which was shipped by Tony f.o.b. destination to a customer on December 31, 2017. The customer was expected to receive the merchandise on January 6, 2018. 3. Merchandise costing $43,150 which was shipped by Tony f.o.b. shipping point to a customer on December 29, 2017. The customer was scheduled to receive the merchandise on January 2, 2018. 4. Merchandise costing $90,100 shipped by a vendor f.o.b. destination on December 30, 2017, and received by Tony on January 4, 2018. 5. Merchandise costing $50,500 shipped by a vendor f.o.b. shipping point on December 31, 2017, and received by Tony on January 5, 2018. Based on the above information, calculate the amount that should appear on Tony’s balance sheet at December 31, 2017, for inventory. Inventory as on December 31, 2017 $ Question 2 Tamarisk Company sells one product. Presented below is information for January for Tamarisk Company. Jan. 1 4 Inventory Sale 102 units at $5 each 81 units at $8 each 11 Purchase 158 units at $6 each 13 Sale 126 units at $9 each 20 Purchase 152 units at $6 each 27 Sale 98 units at $10 each Tamarisk uses the FIFO cost flow assumption. All purchases and sales are on account. (a) Assume Tamarisk uses a periodic system. Prepare all necessary journal entries, including the endof-month closing entry to record cost of goods sold. A physical count indicates that the ending inventory for January is 107 units. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Jan. 31 SHOW LIST OF ACCOUNTS Debit Credit Question 3 Larkspur Company was formed on December 1, 2016. The following information is available from Larkspur’s inventory records for Product BAP. Units January 1, 2017 (beginning inventory) Unit Cost 696 $ 6.00 January 5, 2017 1,392 7.00 January 25, 2017 1,508 8.00 February 16, 2017 928 9.00 March 26, 2017 696 10.00 Purchases: A physical inventory on March 31, 2017, shows 1,856 units on hand. (a) Prepare schedule to compute the ending inventory at March 31, 2017, under FIFO inventory method. LARKSPUR COMPANY COMPUTATION OF INVENTORY FOR PRODUCT BAP UNDER FIFO INVENTORY METHOD March 31, 2017 Units Unit Cost Total Cost $ $ $ Question 4 Pharoah Company uses the LCNRV method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2017, consists of products D, E, F, G, H, and I. Relevant per unit data for these products appear below. Item D Item E Item F Item G Item H Item I $125 $114 $99 $94 $114 $94 Cost 78 83 83 83 52 37 Cost to complete 31 31 26 36 31 31 Selling costs 10 19 10 21 10 21 Estimated selling price Using the LCNRV rule, determine the proper unit value for balance sheet reporting purposes at December 31, 2017, for each of the inventory items above. $ Item D $ Item E $ Item F $ Item G $ Item H $ Item I Question 5 Nash Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis. Cost per Unit Cost to Replace Estimated Selling Price Cost of Completion and Disposal Item No. Quantity Normal Profit 1320 1,400 $3.30 $3.09 $4.64 $0.36 $1.29 1333 1,100 2.78 2.37 3.61 0.52 0.52 1426 1,000 4.64 3.81 5.15 0.41 1.03 1437 1,200 3.71 3.19 3.30 0.26 0.93 1510 900 2.32 2.06 3.35 0.82 0.62 1522 700 3.09 2.78 3.91 0.41 0.52 1573 3,200 1.85 1.65 2.58 0.77 0.52 1626 1,200 4.84 5.36 6.18 0.52 1.03 From the information above, determine the amount of Nash Company inventory. $ The amount of Nash Company’s inventory Question 6 You are called by Tim Duncan of Sunland Co. on July 16 and asked to prepare a claim for insurance as a result of a theft that took place the night before. You suggest that an inventory be taken immediately. The following data are available. Inventory, July 1 $ 36,800 Purchases—goods placed in stock July 1–15 84,000 Sales revenue—goods delivered to customers (gross) 107,900 Sales returns—goods returned to stock 3,600 Your client reports that the goods on hand on July 16 cost $28,400, but you determine that this figure includes goods of $6,300 received on a consignment basis. Your past records show that sales are made at approximately 30% over cost. Duncan’s insurance covers only goods owned. Compute the claim against the insurance company. (Round ratios for computational purposes to 2 decimal places, e.g. 78.73% and final answer to 0 decimal places, e.g. 28,987.) Claim against the insurance company $ Question 7 Indigo Lumber Company handles three principal lines of merchandise with these varying rates of gross profit on cost. Lumber 25% Millwork 30% Hardware and fittings 40% On August 18, a fire destroyed the office, lumber shed, and a considerable portion of the lumber stacked in the yard. To file a report of loss for insurance purposes, the company must know what the inventories were immediately preceding the fire. No detail or perpetual inventory records of any kind were maintained. The only pertinent information you are able to obtain are the following facts from the general ledger, which was kept in a fireproof vault and thus escaped destruction. Lumber Inventory, Jan. 1, 2017 Millwork Hardware $245,200 $91,400 $45,400 Purchases to Aug. 18, 2017 1,501,400 379,400 160,600 Sales to Aug. 18, 2017 2,060,700 507,000 189,000 Submit your estimate of the inventory amounts immediately preceding the fire. (Round ratios for computational purposes to 5 decimal places, e.g. 78.74265% and final answers to 0 decimal places, e.g. 28,987.) Lumber Millwork Hardware Inventory $ $ $ Question 8 The records of Wildhorse’s Boutique report the following data for the month of April. Sales revenue $103,300 Purchases (at cost) $52,100 Sales returns 2,200 Purchases (at sales price) 95,200 Markups 9,000 Purchase returns (at cost) 2,200 Markup cancellations 1,600 Purchase returns (at sales price) 3,200 Markdowns 9,500 Beginning inventory (at cost) 29,725 Markdown cancellations 3,100 Beginning inventory (at sales price) 50,100 Freight on purchases 2,600 Compute the ending inventory by the conventional retail inventory method. (Round ratios for computational purposes to 0 decimal places, e.g. 78% and final answer to 0 decimal places, e.g. 28,987.) Ending inventory using conventional retail inventory method $ Question 9 Presented below is information related to Cheyenne Company. Beginning inventory Purchases (net) Cost Retail $ 54,010 $107,900 129,230 193,500 Net markups 10,281 Net markdowns 26,700 Sales revenue 174,520 Compute the ending inventory at retail. Ending inventory $ LINK TO TEXT Compute a cost-to-retail percentage under the following conditions. (Round ratios to 2 decimal places, e.g. 78.74%) Cost-to-retail percentage (1) Excluding both markups and markdowns. % (2) Excluding markups but including markdowns. % (3) Excluding markdowns but including markups. % (4) Including both markdowns and markups. % LINK TO TEXT Which of the methods in (b) above does the following? (1) Provides the most conservative estimate of ending inventory. (2) Provides an approximation of lower-ofcost-or-market. (3) Is used in the conventional retail method. LINK TO TEXT Compute ending inventory at lower-of-cost-or-market. (Round ratio to 2 decimal places, e.g. 78.74% and final answer to 0 decimal places, e.g. 6,225.) Ending inventory $ LINK TO TEXT Compute cost of goods sold based on (d). (Round answer to 0 decimal places, e.g. 6,225.) Cost of goods sold $ LINK TO TEXT Compute gross margin based on (d). (Round answer to 0 decimal places, e.g. 6,225.) Gross margin $