inventory method
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Show computations for each of the following, and clearly show your final answer using the answer sheet provided.
1. The following information is available from the inventory records of A&O Corporation for January 2012:
Purchases | Sales | ||
Balance on 1/1/2012 | 2,000 @ 9.04 | Sales on 1/27/2012 | 1,800 @11.90 |
Purchases 0n 1/26/2012 | 1,500 @10.51 |
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Assume that A&O maintains perpetual inventory records. Calculate the ending inventory at 1/31/2012 using the moving average inventory method (round numbers to two decimals).
2. The following information is available from the inventory records of VAP Corporation for January 2012:
Purchases | Sales | ||
Balance on 1/1/2012 | 300 @ $10.00 | Sales on 1/10/2012 | 200 @$24..00 |
Purchases 0n 1/11/2012 | 800 @$11.00 | Sales on 1/15/2012 | 500 @$25..00 |
Purchased on 1/20/2012 | 500 @$13.00 | Sales on 1/27/2012 | 250 @$27..00 |
Assume that VAP maintains periodic inventory records. Calculate the cost of goods soldunder the LIFO method.
3. The following information is available for PVP Company for July 2012:
| Cost | Retail |
7/1/2012 inventory | $10,440 | $14,500 |
Purchases during July 2012 | 31,000 | 42,000 |
Net markups, $1,800; net markdowns, $1,000; sales during July 2012, $40,300 |
Calculate the cost of estimated inventory at 7/31/2012 on a LIFO basis.
4. A&O Corp. provided the following information for March 2012, from its perpetual inventory system:
March 1 balance 500 units @ $25 | March 18 sales 300 units @ $35 |
March 28 purchases 400 units @ $30 |
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Assuming the LIFO perpetual method, calculate A&O’s March 2012 ending inventory.
5. A&O Corp. wishes to accumulate $900,000 for purchasing land five years from 1/1/2012. Assume that A&O will earn an annual return of 8% compounded semiannually during the 5-year period. A&O plans to make a deposit every six months starting on 6/30/2012for a total of 10 deposits. Calculate the amount A&O should deposit every 6 months to accumulate $900,000 at the end of 5 years.Use the appropriate factors given below:
Future value of an ordinary annuity at 8%, for 5 periods=5.86660 | Future value of an ordinary annuity at 8%, for10 periods=14.48656 |
Future value of an ordinary annuity at 4%, for 5 periods=5.41632 | Future value of an ordinary annuity at 4%, for 10 periods=12.00611 |
Present value of an ordinary annuity at 4%, for 5 periods=4.45182 | Present value of an ordinary annuity at 4%, for 10 periods=8.11090 |
6. VAP Company adopted the dollar value LIFO method on 12/31/2011. Its inventory on that date was $277,000 and the price index was 100. Information for the subsequent year is as follows:
| Inventory at current prices | Price index |
12/31/2012 | 448,630 | 119 |
Calculate the cost of ending inventory at 12/31/2012 under dollar value LIFO.
7. AVP Company had a balance of $3,500 in the prepaid insurance account at 1/1/2012 and the balance was $2,200 at 12/31/2012. During 2012, AVP recorded insurance expense of $10,000 in its income statement. PVP also paid cash to purchase additional prepaid insurance in 2012. Assuming all necessary journal entries were made, show calculations for the amount of insurance purchased in 2012.
8. On 1/1/2012 A&O Corporation signed a long term non-cancellable purchase commitment with VAP Company to purchase product X for $900,000. As of 12/31/2012 the price of product X had declined to $700,000. On 1/1/2013 A&O received delivery of product X paying $900,000. Prepare the journal entries as appropriate on 1/1/2012, 12/31/2012, and 1/1/2013.
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