Friday, 11 October 2013

A physical inventory of Helmke Company taken at December 31 reveals the following. Per Unit Item Units Cost Market Audio equipment Receivers 335 \$ 90 \$ 98 CD players 250 111 100 MP3 players 316 86 95 Speakers 194 52 41 Video equipment Handheld LCDs 470 150 125 VCRs 281 93 84 Camcorders 202 310 322 Car audio equipment Satellite radios 175 70 84 CD/MP3 radios 160 97 105 Required: 1. Calculate the lower of cost or market for the inventory applied separately to each item.

A physical inventory of Helmke Company taken at December 31 reveals the following.

 Per Unit Item Units Cost Market Audio equipment Receivers 335 \$ 90 \$ 98 CD players 250 111 100 MP3 players 316 86 95 Speakers 194 52 41 Video equipment Handheld LCDs 470 150 125 VCRs 281 93 84 Camcorders 202 310 322 Car audio equipment Satellite radios 175 70 84 CD/MP3 radios 160 97 105

Required:
1.
Calculate the lower of cost or market for the inventory applied separately to each item.

Explanation:
 1
 Per Unit Item Units Cost Market Total Cost Total Market LCM applied to Items Audio equipment Receivers 335 \$ 90 \$ 98 \$ 30,150 \$ 32,830 \$ 30,150 CD players 250 111 100 27,750 25,000 25,000 MP3 players 316 86 95 27,176 30,020 27,176 Speakers 194 52 41 10,088 7,954 7,954 Video equipment Handheld LCDs 470 150 125 70,500 58,750 58,750 VCRs 281 93 84 26,133 23,604 23,604 Camcorders 202 310 322 62,620 65,044 62,620 Car audio equipment Satellite radios 175 70 84 12,250 14,700 12,250 CD/MP3 radios 160 97 105 15,520 16,800 15,520 Total \$ 282,187 \$ 263,024

 Lower of cost or market for inventory applied separately = \$263,024

 2
 To adjust inventory cost to market. \$19,163 = \$282,187 − \$263,024

Anthony Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March. Date Activities Units Acquired at Cost Units Sold at Retail Mar. 1 Beginning inventory 60 units @ \$50.20/unit Mar. 5 Purchase 205 units @ \$55.20/unit Mar. 9 Sales 220 units @ \$85.20/unit Mar. 18 Purchase 65 units @ \$60.20/unit Mar. 25 Purchase 110 units @ \$62.20/unit Mar. 29 Sales 90 units @ \$95.20/unit Totals 440 units 310 units

Anthony Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.

 Date Activities Units Acquired at Cost Units Sold at Retail Mar. 1 Beginning inventory 60 units @ \$50.20/unit Mar. 5 Purchase 205 units @ \$55.20/unit Mar. 9 Sales 220 units @ \$85.20/unit Mar. 18 Purchase 65 units @ \$60.20/unit Mar. 25 Purchase 110 units @ \$62.20/unit Mar. 29 Sales 90 units @ \$95.20/unit Totals 440 units 310 units

Required:

Compute cost of goods available for sale and the number of units available for sale.

Explanation:
 Beginning inventory 60 units @ \$50.20 \$ 3,012 March  5 205 units @ \$55.20 11,316 March 18 65 units @ \$60.20 3,913 March 25 110 units @ \$62.20 6,842 Units available 440 units Cost of goods available for sale \$ 25,083

2. Compute the number of units in ending inventory.

Explanation:
 Units available (from part 1) 440 units Less: Units sold (220 + 90) 310 units Ending Inventory (units) 130 units

 Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification, the March 9 sale consisted of 45 units from beginning inventory and 175 units from the March 5 purchase; the March 29 sale consisted of 25 units from the March 18 purchase and 65 units from the March 25 purchase. (Round your per unit costs to 2 decimal places)

Explanation:
 (a) FIFO perpetual
 Date Goods Purchased Cost of Goods Sold Inventory Balance Mar. 1 60 @ \$50.20 = \$ 3,012 Mar. 5 205 @ \$55.20 = \$ 11,316 60 @ \$50.20 205 @ \$55.20 = \$ 14,328 Mar. 9 60 @ \$50.20 = \$ 3,012 45 @ \$55.20 = \$ 2,484 160 @ \$55.20 = \$ 8,832 Mar. 18 65 @ \$60.20 = \$ 3,913 45 @ \$55.20 65 @ \$60.20 = \$ 3,913 Mar. 25 110 @ \$62.20 = \$ 6,842 45 @ \$55.20 65 @ \$60.20 110 @ \$62.20 = \$ 13,239 Mar. 29 45 @ \$55.20 = \$ 2,484 20 @ \$60.20 45 @ \$60.20 = \$ 2,709 110 @ \$62.20 = \$ 8,046 \$ 17,037

 (b) LIFO perpetual
 Date Goods Purchased Cost of Goods Sold Inventory Balance Mar. 1 60 @ \$50.20 = \$ 3,012 Mar. 5 205 @ \$55.20 = \$ 11,316 60 @ \$50.20 205 @ \$50.20 = \$ 14,328 Mar. 9 205 @ \$55.20 = \$ 11,316 45 @ \$50.20 = \$ 2,259 15 @ \$50.20 = \$ 753 Mar. 18 65 @ \$60.20 = \$ 3,913 45 @ \$50.20 65 @ \$60.20 = \$ 6,172 Mar. 25 110 @ \$62.20 = \$ 6,842 45 @ \$50.20 65 @ \$60.20 110 @ \$62.20 = \$ 13,014 45 @ \$50.20 Mar. 29 90 @ \$62.20 = \$ 5,598 65 @ \$60.20 20 @ \$62.20 = \$ 7,416 \$ 17,667

 (c) Weighted Average perpetual
 Date Goods Purchased Cost of Goods Sold Inventory Balance Mar. 1 60 @ \$50.20 = \$ 3,012 Mar. 5 205 @ \$55.20 = \$ 11,316 60 @ \$50.20 205 @ \$55.20 = \$ 14,328 (avg. = \$54.07) Mar. 9 220 @ \$54.07 = \$ 11,895 45 @ \$54.07 = \$ 2,433 (avg. = \$54.07) Mar. 18 65 @ \$60.20 = \$ 3,913 45 @ \$54.07 65 @ \$60.20 = \$ 6,346 (avg. = \$57.69) Mar. 25 110 @ \$62.20 = \$ 6,842 45 @ \$54.07 65 @ \$60.20 110 @ \$62.20 = \$ 13,188 (avg. = \$59.94) Mar. 29 90 @ \$59.94 = \$ 5,395 130 @ \$59.94 = \$ 7,793 \$ 17,290

 (d) Specific Identification
 Date Goods Purchased Cost of Goods Sold Inventory Balance Mar. 1 60 @ \$50.20 = \$ 3,012 Mar. 5 205 @ \$55.20 = \$ 11,316 60 @ \$50.20 205 @ \$55.20 = \$ 14,328 Mar. 9 45 @ \$50.20 = \$ 2,259 15 @ \$50.20 175 @ \$55.20 = \$ 9,660 30 @ \$55.20 = \$ 2,409 Mar. 18 65 @ \$60.20 = \$ 3,913 15 @ \$50.20 30 @ \$55.20 65 @ \$60.20 = \$ 6,322 Mar. 25 110 @ \$62.20 = \$ 6,842 15 @ \$50.20 30 @ \$55.20 65 @ \$60.20 110 @ \$62.20 = \$ 13,164 Mar. 29 25 @ \$60.20 = \$ 1,505 15 @ \$50.20 65 @ \$62.20 = \$ 4,043 30 @ \$55.20 40 @ \$60.20 \$ 17,467 45 @ \$62.20 = \$ 7,616

Compute gross profit earned by the company for each of the four costing methods. For specific identification, the March 9 sale consisted of 45 units from beginning inventory and 175 units from the March 5 purchase; the March 29 sale consisted of 25 units from the March 18 purchase and 65 units from the March 25 purchase. (Round your per unit costs to 2 decimal places and inventory balances.)