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 $98,00
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.