Student Name: Instructor

Class: McGraw-Hill/Irwin
Problem 08-05

THE FERRIS COMPANY

Inventory

Cost of goods available for sale for periodic system:

Units Unit cost Total cost

Beginning inventory 6,000 $ 8.00 $ 48,000
Purchases 5,000 $ 9.00 $ 45,000
6,000 $ 10.00 60,000 105,000
Cost of goods available 17,000 $ 153,000
Correct!

1. FIFO, periodic system

Cost of goods available for sale $ 153,000
Less: Ending inventory (calculation belo (78,000) «- Correct!
Cost of goods sold $ 75,000 «- Correct!

Cost of ending inventory:

Date of Total
purchase Units Unit cost cost
Jan. 18 6,000 $ 10.00 $ 60,000
Jan. 10 2,000 9.00 18,000
Totals 8,000 $ 78,000
Correct! Correct!

2. LIFO, periodic system

Cost of goods available for sale $ 153,000
Less: Ending inventory (calculation below) (66,000) «- Correct!
Cost of goods sold $ 87,000 «- Correct!

Cost of ending inventory:

Date of Total
purchase Units Unit cost cost
Beginning inventory 6,000 $ 8.00 $ 48,000
Jan. 10 2,000 9.00 18,000
Totals 8,000 $ 66,000
Correct! Correct!

3. LIFO, perpetual system

Date Units Unit cost Purchased Sold Balance

Beginning inventory 6,000 $ 8.00 $48,000 $ 48,000
January 5 3,000 $ 8.00 $ 24,000 $ 24,000
January 10 5,000 $ 9.00 $ 45,000 $ 69,000
January 12 2,000 $ 9.00 $ 18,000 $ 51,000
January 18 6,000 $ 10.00 $ 60,000 $ 111,000
January 20 4,000 $ 10.00 $ 40,000 $ 71,000 «- Correct!
Total cost of goods sold: $ 82,000 «- Correct!
 Student Name: Instructor
Class: McGraw-Hill/Irwin
Problem 08-05

4. Average cost, periodic system

Cost of goods available for sale $ 153,000
Less: Ending inventory (calculation belo (72,000) «- Correct!
Cost of goods sold $ 81,000 «- Correct!

Cost of ending inventory:

Weighted
Avg. Unit Ending
Units Cost Inventory
8,000 $ 9.00 $ 72,000 «- Correct!

5. Average cost, perpetual system

Date Units Unit cost Purchased Sold Balance

Beginning inventory 6,000 $ 8.00 $48,000 $ 48,000
January 5 3,000 $ 8.00 $ 24,000 $ 24,000
January 10 5,000 $ 9.00 $ 45,000 $ 69,000
January 12 2,000 $ 8.63 $ 17,250 $ 51,750
January 18 6,000 $ 10.00 $ 60,000 $ 111,750
January 20 4,000 $ 9.31 37,250 $ 74,500 «- Correct!
Cost of goods sold: $ 78,500 «- Correct!
Given Data P08-05:

FERRIS COMPANY

Merchandise transactions:

Purchases
Date of Purchase Units Unit Cost Total Cost
Jan. 10 5,000 $ 9.00 $ 45,000
Jan. 18 6,000 $ 10.00 60,000
Totals 11,000 $ 105,000

Sales
Date of Sale Units
Jan. 5 3,000
Jan. 12 2,000
Jan. 20 4,000
Total 9,000

Beginning inventory, units 6,000

Cost per unit, beginning inventory $ 8.00
Units on hand, end of month 8,000
 Student Name: Instructor
Class: McGraw-Hill/Irwin
Problem 08-06

Requirement 1:
TOPANGA GROUP
Inventory

Cost of goods available for sale for periodic system:

Units Unit cost Total cost

Beginning inventory 5,000 $ 4.00 $ 20,000
Purchases 12,000 $ 4.50 54,000
17,000 $ 5.00 85,000
Cost of goods available 34,000 $ 159,000
Correct! Correct!

a. FIFO
Cost of goods available for sale $ 159,000
Less: Ending inventory (calculation belo (70,000) «- Correct!
Cost of goods sold $ 89,000 «- Correct!

Cost of ending inventory:

Date of Total
purchase Units Unit cost cost
March 22 14,000 $ 5.00 $ 70,000 «- Correct!

b. LIFO
Cost of goods available for sale $ 159,000
Less: Ending inventory (calculation below) (60,500) «- Correct!
Cost of goods sold $ 98,500 «- Correct!

Cost of ending inventory:

Date of Total
purchase Units Unit cost cost
Jan. 7 5,000 $ 4.00 $ 20,000
Feb. 16 9,000 $ 4.50 40,500
Totals 14,000 $ 60,500
Correct! Correct!
c. Average cost
Cost of goods available for sale $ 159,000
Less: Ending inventory (calculation belo (65,471) «- Correct!
Cost of goods sold $ 93,529 «- Correct!

Cost of ending inventory:

Weighted
Avg. Unit Ending
Units Cost Inventory
14,000 $ 4.6765 $ 65,471 «- Correct!

Requirement 2:
Gross Profit ratio:
Gross
Gross Profit
Profit Sales Ratio

FIFO: $ 51,000 $ 140,000 36% «- Correct!

LIFO: $ 41,500 $ 140,000 30% «- Correct!
Average: $ 46,471 $ 140,000 33% «- Correct!

In situations when costs are rising, LIFO results in a higher cost of goods sold and,
therefore, a lower gross profit ratio than FIFO.
Given Data P08-06:

TOPANGA GROUP

Merchandise transactions:

Purchases
Date of Purchase Units Unit Cost Total Cost
Jan. 7 5,000 $ 4.00 $20,000
Feb. 16 12,000 $ 4.50 54,000
March 22 17,000 $ 5.00 85,000
Totals 34,000 $159,000

Number of units sold during quarter 20,000

Sales price of all units sold in quarter $7.00
Units on hand, end of quarter 14,000
 Student Name: Instructor
Class: McGraw-Hill/Irwin
Problem 08-07

CARLSON AUTO DEALERS INC.

Computations

Requirement 1:
Beginning inventory $ 183,000
Purchases: 211 $ 63,000
212 63,000
213 64,500
214 66,000
215 69,000
216 70,500
217 72,000
218 72,300
219 75,000 615,300
Cost of goods available $ 798,300 «- Correct!

Cost of goods available for sale $ 798,300

Less: Ending inventory (see below) (210,000) «- Correct!
Cost of goods sold $ 588,300 «- Correct!

Cost of ending inventory: Car ID Cost

213 $ 64,500
216 70,500
219 75,000
$ 210,000

Requirement 2:
Cost of goods available for sale $ 798,300
Less: Ending inventory (see below) (219,300) «- Correct!
Cost of goods sold $ 579,000 «- Correct!

Cost of ending inventory: Car ID Cost

219 $ 75,000
218 72,300
217 72,000
Total $ 219,300 «- Correct!
 Student Name: Instructor
Class: McGraw-Hill/Irwin
Problem 08-07

Requirement 3:
Cost of goods available for sale $ 798,300
Less: Ending inventory (see below) (183,000) «- Correct!
Cost of goods sold $ 615,300 «- Correct!

Cost of ending inventory: Car ID Cost

203 $ 60,000
207 60,000
210 63,000
Total $ 183,000 «- Correct!

Requirement 4:
Cost of goods available for sale $ 798,300
Less: Ending inventory (see below) (199,575) «- Correct!
Cost of goods sold $ 598,725 «- Correct!

Cost of ending inventory:

Weighted average unit cost $ 66,525 «- Correct!
x number of cars in ending inventory 3
Total $ 199,575 «- Correct!
Given Data P08-07:

CARLSON AUTO DEALERS INC.

Cars in inventory at beginning of 2009:

Car ID Cost Selling Price

203 $ 60,000 $ 90,000
207 60,000 90,000
210 63,000 90,000

Purchases and Sales:

Car ID Cost Selling Price

211 $ 63,000 $ 90,000
212 63,000 93,000
213 64,500 not sold
214 66,000 96,000
215 69,000 100,500
216 70,500 not sold
217 72,000 105,000
218 72,300 106,500
219 75,000 not sold
 Student Name: Instructor
Class: McGraw-Hill/Irwin
Problem 08-13

HINT: Don't ignore the column headers on the spreadsheet. (Base year
costs do not usually equal year-end costs.
TAYLOR COMPANY
Inventory

Ending Inventory Inventory Layers Inventory Layers Ending Inventory

Date At Base Year Cost At Base Year Cost Converted To Cost DVL Cost
1/1/2011 $ 400,000 $ 400,000 $ 400,000 $ 400,000
### $ 420,000 400,000 400,000 Correct!
Year 2011 20,000 21,000 421,000
### $ 435,000 $ 400,000 $ 400,000 Correct!
Year 2011 20,000 21,000
Year 2012 15,000 16,800 437,800
### $ 425,000 $ 400,000 $ 400,000 Correct!
Year 2011 20,000 21,000
Year 2012 5,000 5,600 426,600
Correct!
Given Data P08-13:

TAYLOR COMPANY

Ending Inventory Cost

Date at Year-End Costs Index
12/31/2011 $441,000 1.05
12/31/2012 487,200 1.12
12/31/2013 510,000 1.20

Inventory value, 1/1/2011 $400,000