ACT 3391 GSU Using a Calendar Year Accounting Period Questions

TRADITIONAL HOMEWORK ITEMS – FALL 2023 – ACT 3391
General Instructions for the Traditional Homework – refer to the instructions for traditional item no. 1.
26. (3 points) The following pertain to the cost of H’s only inventory item:
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Inventory on hand, January 1
Purchases, January 2
Purchases, January 12
Purchases, January 16
Purchase, January 20
Purchases, January 28
0 units
70 units @ $21 per unit
95 units @ $25 per unit
80 units @ $30 per unit
50 units @ $28 per unit
55 units @ $33 per unit
350
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Sales, January 5
Sales, January 14
Sales, January 18
Sales, January 19
Sales, January 25
Sales, January 29
40 units @ $50 per unit
80 units @ $50 per unit
50 units @ $50 per unit
40 units @ $50 per unit
20 units @ $50 per unit
30 units @ $50 per unit
260
(260 x $50 = $13,000)
Calculate COGS AND GP for January AND EI as of 01-31 under the following assumptions:
➢ H uses periodic LIFO
EI:
COGS:
Gross profit:
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H uses periodic FIFO
EI:
COGS:
Gross profit:
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H uses a weighted average method and rounds the unit cost to the nearest penny. H makes sure that exactly 100% of
its COGAS ends up either as EI or COGS.
EI:
COGS:
Gross profit:
➢ H uses perpetual LIFO
EI:
COGS:
Gross profit:
27. (3 points) Irene uses a calendar-year accounting period and a periodic inventory system. Assume Irene had the following
independent situations:
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Situation 1. Goods shipped by Irene to a customer f.o.b. shipping point on 12-30-11 were in transit at 12-31-11. The goods cost
$12,000. On 12-31-11, Irene billed the customer and recorded a credit sale of $25,000.
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Situation 2. Goods shipped to Irene by a vendor f.o.b. destination on 12-28-11 were in transit at 12-31-11. The goods cost
$15,000. On 01-04-12, the day the goods arrived, Irene recorded a credit purchase of $15,000.
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Situation 3. Goods shipped to Irene by a vendor f.o.b. shipping point on 12-28-11 were in transit at 12-31-11. The goods cost
$40,000. On 01-03-12, Irene received the goods. On 12-31-11, Irene recorded a credit purchase of $40,000.
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Situation 4. Goods shipped by Irene to a customer f.o.b. shipping point on 12-29-11 were in transit at 12-31-11. The goods cost
$25,000. The customer received the goods on 01-04-12. On 01-04-12, Irene billed the customer and recorded a credit sale of
$60,000.
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Situation 5. Goods shipped by Irene to a customer f.o.b. destination on 12-29-11 were in transit at 12-31-11. The goods cost
$27,000. On 12-30-12, Irene billed the customer and recorded a credit sale of $65,000. The customer received the goods on 0115-12.
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Situation 6. On 12-31-11, Irene was in possession of $40,000 of goods that she was holding on a consignment basis. Irene
received these goods on 12-24-11. Upon receipt of these goods, Irene recorded a credit purchase of $40,000.
Assume Irene values the inventory reported on its balance sheet and the amount recorded as cost of goods sold on its income
statement on the basis of its physical inventory count that Irene performed on 12-31-11. Irene counts whatever is on its premises.
Individually discuss the effect (in dollars and direction, e.g., overstate, understate, no effect) that each of the above items has on:
➢ Irene’s sales revenue for the year ended 12-31-11
➢ Irene’s cost of goods sold for the year ended 12-31-11
➢ Irene’s accounts receivable as of 12-31-11
➢ Irene’s inventory as of 12-31-11
➢ Irene’s accounts payable as of 12-31-11
➢ Irene’s stockholders’ equity as of 12-31-11
Situation
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I’s sales for year
ended 12-31-11
I’s COGS for
year ended
12-31-11
I’s AR as of
12-31-11
I’s inventory as
of 12-31-11
I’s AP as of
12-31-11
I’s SE as of
12-31-11
Remember, each box above should have BOTH an effect AND a $ amount.
28. (3 points) Diane makes one product. Diana adopted the dollar-value LIFO inventory method on 12-31-20. Her ending inventory
at 12-31-20 was $105,000. Additional inventory data follows:
Year
2021
2022
2023
2024
2025
Inventory at
year-end prices
$107,590
$105,570
$110,745
$113,300
$114,450
Price index
(base year 2020)
1.015
1.020
1.035
1.030
1.050
Cost of goods manufactured
during the year
$570,000
$680,000
$710,000
$720,000
$790,000
Compute the inventory at December 31, 2021, 2022, 2023, 2024, and 2025 AND the cost of goods sold for each year assuming Diane
uses the dollar-value LIFO method for each year.
29. (2 points) Hartley’s accounting records included the following information:
Inventory, 01-01-19
Purchases during 2019 (excluding shipping)
Purchase returns during 2019
Freight-in on 2019 purchases
Freight-out on 2019 sales
Sales during 2019
$45,000
$750,000
$25,000
$10,000
$45,000
$1,300,000
Hartley completed a physical inventory on 12-31-19 and calculated an ending inventory of $59,000, at cost. In recent years, Hartley’s
gross profit equaled 45% of Hartley’s sales. Hartley suspects some inventory may have been shoplifted. Prepare the entry, if
necessary, to reflect the estimated loss from any shoplifted items.
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