Cost of Goods Available for Sale =

Leader: Chen Guo Handout Title: Chapter 7 Course: Acct 284 Supplemental Instruction Instructor: Clem Iowa State University Date: Oct 12, 2009  Inventory o Merchandiser o Manufacturer Cost of Goods Sold = Cost of Goods Available for Sale =  Inventory Costing Methods o Specific ID o FIFO o LIFO o Weighted Average LIFO Conformity Rule Lower of Cost or Market Ratio Analysis o Inventory Turnover Ratio o Days to Sell = Supplemental Instruction 1060 Hixson-Lied Student Success Center v 294-6624 v www.si.iastate.edu 1. The following are the transactions for the month of July.Unit Units Unit Cost Selling PriceJuly 1 Beginning inventory 120 11 July 13 Purchase 550 12 July 25 Sold (280 ) 18July 31 Ending inventory 390 Required:Calculate sales, cost of goods sold, and gross profit, under FIFO, LIFO, and weighted average. Assume a periodic inventory system is used. (Round your answers to the nearest dollar amount. Omit the "$" sign in your response.)Weighted FIFO LIFO AverageSales $ $ $Cost of goods sold Gross profit $ $ $2. The Jewel Fool had the following inventory items on hand at the end of the year.Cost per Replacement Quantity Item Cost per ItemNecklaces 56 $ 87 $ 68 Bracelets 44 78 43 Required:Determine the lower of cost or market per unit and the total amount that should be reported on the balance sheet for each item of inventory. (Omit the "$" sign in your response.)Lower of cost or market per unit Total amountNecklaces $ $Bracelets $Total $3. Orion Iron Corp. uses a periodic inventory system. At the end of the annual accounting period, December 31, 2009, the accounting records provided the following information:Transactions Units Unit Cost a. Inventory, December 31, 2008 3,260 $ 11For the year 2009: b. Purchase, April 11 8,880 9 c. Purchase, June 1 7,890 12 d. Sale, May 1 (sold for $40 per unit) 3,720 e. Sale, July 3 (sold for $40 per unit) 5,460 f. Operating expenses (excluding income tax expense), $205,010 Required:(a) Compute the cost of goods sold under FIFO, LIFO, and weighted average. (Round Weighted average cost to two decimal places and final answers to the nearest dollar amount. Omit the "$" sign in your response.) Cost of goods soldFIFO $ LIFO $ Weighted average $ (b) Prepare an income statement that shows 2009 amounts under the FIFO method, LIFO method and weighted average method. (Round Weighted average cost to two decimal places and final answers to the nearest dollar amount. Omit the "$" sign in your response.) ORION IRON CORPORATION Income Statement For the Year Ended December 31, 2009Case A Case B Case CFIFO LIFO Weighted AverageSales revenue $ $ $Cost of goods sold Gross profit Operating expenses Operating income $ $ $ Case A Case B Case CFIFO LIFO Weighted AverageEnding Inventory $ $ $(c) Compute the ending inventory amounts that would be reported under the three methods. (Round Weighted average cost to two decimal places and final answers to the nearest dollar amount. Omit the "$" sign in your response.) (d) Which inventory costing method may be preferred by Orion Iron Corp. for income tax purposes?LIFOFIFOWeighted average4. RadioShack Corporation (RadioShack) sells consumer electronic goods and services through its 4,972 stores and 777 kiosks. In its annual report filed with the SEC for the year ended December 31, 2005, the company reported that it wrote down inventory by approximately $20,000,000 because its cost exceeded its market value.Required:Show the effects of this adjustment on the journal entry that the company would have made to record it. (Omit the "$" sign in your response.)General Journal Debit Credit(Click for List) (Click for List)

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