P6-70B (Learning Objective 2: Compare various inventory costing methods) The records of Shepard Aviation include the following accounts for inventory of aviation fuel at October 31 of the current year: Nov 1 Balance 700 units @ $7.40 $ 5,180 Jan 8 Purchase 350 units @ $7.50 2,625 May 21 Purchase 8,450 units … Continue reading "P6-70B (L earn i ng Obj ec tiv e 2: Co mp are v ar i o u s i n v en t ory cos ti ng m e t hods )…"
P6-71B (Learning Objective 3: Explain GAAP and apply the lower–of-cost-or-market rule to inventories) Saltwater Trade Mart has recently had lackluster sales. The rate of inventory turnover has dropped, and the merchandise is gathering dust. At the same time, competition has forced Saltwater’s suppliers to lower the prices that Saltwater will pay when it replaces its … Continue reading "P6-7 1 B (L earn i ng Obj ec tiv e 3: Exp la i n G AA P and a pp ly t he lo w er – o f- cos t- or…"
P6-72B (Learning Objective 4: Compute and evaluate gross margin and inventory turnover) Cinnamon Roll, Inc., and Dunking Coffee Corporation are both specialty food chains. The two companies reported these figures, in millions: (Amounts in millions) 2012 2011 Revenues: Net sales $542 … Continue reading "P6-72B (L earn i ng Obj ec tiv e 4: Co mput e and e v al u a t e gross m arg i n and i n v en t…"
P6-73B (Learning Objective 5: Use the COGS model to make management decisions, and estimate inventory by the gross profit method) Assume Young Company, a music store, lost some inventory in a fire on March 15. To file an insurance claim, Young Company must estimate its March 15 inventory by the gross profit method. Assume that … Continue reading "P6-73B (Learning Objective 5: Use the COGS model to make management decisions, and estimate…"
P6-74B (Learning Objective 5: Use COGS model to make management decision of the amount of inventory to purchase) Eddie’s Convenience Stores’ income statement for the year ended December 31, 2011 and its balance sheet as of December 31, 2011 reported the following. The business is organized as a proprietorship, so it pays no corporate income … Continue reading "P6-7 4 B (L earn i ng Obj ec tiv e 5: U se C OGS m odel t o m a k e m anage m en t dec i s i on o…"
P6-75B (Learning Objective 6: Analyze the effects of inventory errors) The accounting records of Columbia Furniture show these data (in millions). The shareholders are very happy with Columbia’s steady increase in net income. Net sales revenue………………………. Cost of goods sold: Beginning inventory ………………. $ 11 $38 … Continue reading "P6-75B (L earn i ng Obj ec tiv e 6: Analy z e t he e ff ec t s o f i n v en t ory errors ) The a…"
E6-76 (Learning Objective 2: Apply various inventory methods to make inventory policy decisions) For each of the following situations, identify the inventory method that you would use; or, given the use of a particular method, state the strategy that you would follow to accomplish your goal: a. Inventory costs are increasing. Your company uses LIFO … Continue reading "E6-76 (L earn i ng Obj ec tiv e 2: A pp ly v ar i o u s i n v en t ory m e t hods t o m a k e i n…"
E6-77 (Learning Objective 2: Measure the effect of a LIFO liquidation) Suppose In Style Fashions, a specialty retailer, had these records for ladies’ evening gowns during 2012. Beginning inventory (44 @ $975) ………………….. $ 42,900 Purchase in February (19 @ $1,050) ……………… 19,950 Purchase in June (55 @ $1,100) ……………………. 60,500 Purchase … Continue reading "E6-77 (L earn i ng Obj ec tiv e 2: Meas u re t he e ff ec t o f a LIFO l iqui da ti on ) Suppose…"
E6-78 (Learning Objective 4: Evaluate profitability) Z Mart, Inc., declared bankruptcy. Let’s see why. Z Mart reported these figures: Millions 2012 2011 2010 2009 Sales $36.6 $35.3 $34.3 Cost of sales 29.4 27.6 26.8 Selling expenses 7.5 6.3 6.0 … Continue reading "E6-78 (L earn i ng Obj ec tiv e 4: Ev al u a t e p ro fit a bi l it y ) Z M a rt, Inc., decl a red…"
P6-79 (Learning Objectives 1, 4: Account for inventory; analyze two companies that use different inventory methods) Arnold Financial Management believes that the biotechnology industry is a good investment and is considering investing in one of two companies. However, one company, HeartStart, Inc., uses the FIFO method of inventory, and another company, GeneTech, Inc., uses LIFO. … Continue reading "P6-79 (Learning Objectives 1, 4: Account for inventory; analyze two companies that use different…"