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Practice Qs - Inventories

The document contains 7 questions about calculating inventory values using different inventory costing methods like weighted average, FIFO, and retail. It provides inventory transactions and asks to calculate ending inventory balances and costs of goods sold using the specified methods.

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12 views

Practice Qs - Inventories

The document contains 7 questions about calculating inventory values using different inventory costing methods like weighted average, FIFO, and retail. It provides inventory transactions and asks to calculate ending inventory balances and costs of goods sold using the specified methods.

Uploaded by

sahilsonii058
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Question 1

Consider the information for each of the following two companies.

A B

Opening inventory ? $750

Purchases $1,415 $5,860

Transportation-in $25 ?

Cost of goods available for sale $1,940 $6,620

Ending inventory $340 ?

Cost of goods sold ? $5,740

Required: Calculate the missing amounts.


Solution 1

A B
Opening inventory $500 $750
Purchases $1,415 $5,860
Transportation-in $25 $10
Cost of goods available for sale $1,940 $6,620
Ending inventory $340 $880
Cost of goods sold $1,600 $5,740
Question 2

Laplante Inc. uses the perpetual inventory system. The following transactions took place during January 2017:

Date Units Unit cost /


Selling price

Jan 1 Opening inventory 100 $1

7 Purchase 10 $2

9 Sale 80 $5

21 Purchase 20 $3

24 Sale 40 $6

Calculate ending inventory under the weighted average cost flow assumption.
Solution 2

Receipts Issues Balance


Date Description
Units Cost / unit Amount Units Cost / unit Amount Units Cost / unit Amount
1-Jan Opening inventory 100 1.00 100.00 100 1.00 100.00
7-Jan Purchases 10 2.00 20.00 10 2.00 20.00
110 1.09 120.00
9-Jan Sale 80 1.09 87.27 (80) 1.09 (87.27)
30 1.09 32.73
21-Jan Purchases 20 3.00 60.00 20 3.00 60.00
50 1.85 92.73
24-Jan Sale 40 1.85 74.18 (40) 1.85 (74.18)
10 1.85 18.55 Ending Inventory
Question 3
Southern Cross Company Limited made the following purchases and sales of Product A during the year ended
December 31, 2020:

Opening inventory at January 1 amounted to 4,000 units at $11.90 per unit for Product A.

Required:
1. Prepare inventory record card for Product A for the year using the weighted average inventory cost flow
assumption.

2. Calculate total cost of ending inventory at December 31, 2020.


Solution 3

Receipts Issues Balance


Date Description
Units Cost / unit Amount Units Cost / unit Amount Units Cost / unit Amount
1-Jan Opening inventory 4,000 11.90 47,600.00 4,000 11.90 47,600.00
7-Jan Purchases 8,000 12.00 96,000.00 8,000 12.00 96,000.00
12,000 11.97 143,600.00
30-Mar Sale 9,000 11.97 107,700.00 (9,000) 11.97 (107,700.00)
3,000 11.97 35,900.00
10-May Purchases 12,000 12.10 145,200.00 12,000 12.10 145,200.00
15,000 12.07 181,100.00
4-Jul Sale 14,000 12.07 169,026.67 (14,000) 12.07 (169,026.67)
1,000 12.07 12,073.33 Ending Inventory
Question 4
Southern Cross Company Limited made the following purchases and sales of Product B during the year ended
December 31, 2020:

Opening inventory at January 1 amounted to 2,000 units at $13.26 per unit for Product B.

Required:
1. Prepare inventory record card for Product B for the year using the weighted average inventory cost flow
assumption.

2. Calculate total cost of ending inventory at December 31, 2020.


Solution 4

Receipts Issues Balance


Date Description
Units Cost / unit Amount Units Cost / unit Amount Units Cost / unit Amount
1-Jan Opening inventory 2,000 13.26 26,520.00 2,000 13.26 26,520.00
13-Jan Purchases 5,000 13.81 69,050.00 5,000 13.81 69,050.00
7,000 13.65 95,570.00
15-Jul Sale 1,000 13.65 13,652.86 (1,000) 13.65 (13,652.86)
6,000 13.65 81,917.14
23-Oct Purchases 7,000 14.21 99,470.00 7,000 14.21 99,470.00
13,000 13.95 181,387.14
14-Dec Sale 8,000 13.95 111,622.86 (8,000) 13.95 (111,622.86)
5,000 13.95 69,764.29 Ending Inventory
Question 5

The following table shows the financial data for AAA Ltd. for the year ended December 31, 2020.

The inventory count for 2015 was overstated by $45,000.

Required: Calculate the corrected cost of goods sold, net income, total assets and equity for 2015 and 2016.
Solution 5

Solution:
2015 2016
restated
Cost of Goods Sold 545,000 615,000
Net income 205,000 395,000
Total assets 1,455,000 1,400,000
Equity 1,355,000 1,300,000
Question 6

The following table shows the financial data for AAA Ltd. for the year ended December 31, 2020.

The inventory count for 2015 was understated by $30,000.

Required: Calculate the corrected cost of goods sold, net income, total assets and equity for 2015 and 2016.
Solution 6

Solution:
2015 2016
restated
Cost of Goods Sold 470,000 690,000
Net income 280,000 320,000
Total assets 1,530,000 1,400,000
Equity 1,430,000 1,300,000
Question 7

Varane Ltd. is required to submit an interim financial statement to their bank as part of the lineof- credit
monitoring process. Below is information regarding their first quarter business for 2017:

*gross profit margin

Show calculations to estimate the company’s ending inventory at the end of the quarter using the gross profit
method.
Solution 7

Solution:
Sales less returns 1,654,380

COGS:
Opening inventory 420,364
Purchases 1,323,280
Less: returns (18,270)
Transport - in 9,660
COGAS 1,735,034

COGS 1,091,891

Closing inventory 643,143

S 100 1,654,380.00
C 66 1,091,890.80
P 34 562,489.20
Question 8

Ceabane Ltd. is required to submit an interim financial statement to their creditors. Below is information
regarding their first six months for 2017:

Required: Prepare a schedule of calculations to estimate the company’s ending inventory at the end of the
quarter using the retail inventory method.
Solution 8

Solution:
Cost of Goods Available for Sale: At Cost At Retail
Opening inventory 659,890 1,298,010
Purchases 4,660,362 8,958,180
Less: Purchase returns (73,920) (167,090)
5,246,332 10,089,100

Cost to retail ratio: 0.52

Ending inventory at retail price:


COGAS (at retail) 10,089,100
Less: net sales 7,693,980
(62,440) 7,631,540
2,457,560

Ending inventory at cost: 1,277,931

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