Skip to ContentGo to accessibility pageKeyboard shortcuts menu
OpenStax Logo

EB 1.

LO 10.1Calculate the goods available for sale for Soros Company, in units and in $ (dollar amounts), given the following facts about their inventory for the period.

Chart showing Beginning inventory of 1,100 units at $20 each, Purchased goods during the period 800 units for $20 each, sold goods during the period 700 units for $37 each, and Purchased goods during the period 650 units for $21 each.
EB 2.

LO 10.1X Company accepts goods on consignment from C Company, and also purchases goods from P Company during the current month. X Company plans to sell the merchandise to customers during the following month. In each of these independent situations, who owns the merchandise at the end of the current month, and should therefore include it in their company’s ending inventory? Choose X, C, or P.

  1. Goods ordered from P, in transit, with shipping terms FOB destination.
  2. Goods ordered from P, in transit, with shipping terms FOB shipping point.
  3. Goods ordered from P, inventory in stock, held in storage until floor space is available.
  4. Goods ordered from C, inventory in stock, set aside for customer pickup and payments to finalize sale.
EB 3.

LO 10.1Considering the following information, and applying the lower-of-cost-or-market approach, what is the correct value that should be reported on the balance sheet for the inventory?

Chart showing Cost per Unit and Market Value per Unit respectively for Inventory item 1 (20 units) at $100 and $95, Inventory item 2 (30 units) at 75 and 70, and Inventory item 3 (45 units) at 50 and 55.
EB 4.

LO 10.2Complete the missing piece of information involving the changes in inventory, and their relationship to goods available for sale, for the two years shown.

Chart showing calculation of Cost of Goods Sold for 2021 and 2022 respectively: Beginning Inventory, Purchases, Goods Available for Sale, Ending Inventory, Cost of Goods Sold; 2021 ? , 700,000, 875,000, ?, 675,000; 2022 $200,000, ?, 388,500, 75,000, 313,500.
EB 5.

LO 10.2Bleistine Company had the following transactions for the month.

Chart showing Beginning Inventory of 880 units at $35 per unit, Purchase of June 1 of 750 units at $40 each, Purchase of November 1 of 800 units at $43 each, and ending inventory of 110 units at a cost of ? each.

Calculate the ending inventory dollar value for each of the following cost allocation methods, using periodic inventory updating. Provide your calculations.

  1. first-in, first-out (FIFO)
  2. last-in, first-out (LIFO)
  3. weighted average (AVG)
EB 6.

LO 10.2Bleistine Company had the following transactions for the month.

Chart showing Beginning Inventory of 880 units at $30,800 per unit, Purchase of June 1 of 750 units at $30,000 each, Purchase of November 1 of 800 units at $34,400 each, Total Goods Available for Sale $95,200, 2,430 units, and ending inventory of 110 units at a cost of ? each.

Calculate the gross margin for the period for each of the following cost allocation methods, using periodic inventory updating. Assume that all units were sold for $50 each. Provide your calculations.

  1. first-in, first-out (FIFO)
  2. last-in, first-out (LIFO)
  3. weighted average (AVG)
EB 7.

LO 10.2Prepare journal entries to record the following transactions, assuming periodic inventory updating and first-in, first-out (FIFO) cost allocation.

Chart showing November 19 purchase of 1,200 units at $6 each, November 22 purchase of 980 units at $5 each, and November 30 sale of 850 units for $10 each.
EB 8.

LO 10.3Calculate the cost of goods sold dollar value for B65 Company for the month, considering the following transactions under three different cost allocation methods and using perpetual inventory updating. Provide calculations for first-in, first-out (FIFO).

Beginning Inventory is 100 units at cost of $66 each, purchased 80 units at $75 each, sold 50 units for $120 each, sold 25 units for $125 each, Ending Inventory is 105 units.
EB 9.

LO 10.3Calculate the cost of goods sold dollar value for B66 Company for the month, considering the following transactions under three different cost allocation methods and using perpetual inventory updating. Provide calculations for last-in, first-out (LIFO).

Beginning Inventory is 100 units at cost of $66 each, purchased 80 units at $75 each, sold 50 units for $120 each, sold 25 units for $125 each, Ending Inventory is 105 units.
EB 10.

LO 10.3Calculate the cost of goods sold dollar value for B67 Company for the month, considering the following transactions under three different cost allocation methods and using perpetual inventory updating. Provide calculations for weighted average (AVG).

Beginning Inventory is 100 units at cost of $66 each, purchased 80 units at $75 each, sold 50 units for $120 each, sold 25 units for $125 each, Ending Inventory is 105 units.
EB 11.

LO 10.3Prepare journal entries to record the following transactions, assuming perpetual inventory updating and first-in, first-out (FIFO) cost allocation. Assume no beginning inventory.

November 19 purchased merchandise for resale 1,200 units at $6 each. November 22 purchased merchandise for resale 980 units at $5 each. November 30 sold merchandise 850 units for $10 each.
EB 12.

LO 10.3Prepare journal entries to record the following transactions, assuming perpetual inventory updating and last-in, first-out (LIFO) cost allocation. Assume no beginning inventory.

March 12 purchased merchandise for resale 120 units at $52 each. March 15 purchased merchandise for resale 180 units at $56 each. March 16 sold merchandise 90 units for $95 each.
EB 13.

LO 10.4If a group of inventory items costing $3,200 had been double counted during the year-end inventory count, what impact would the error have on the following inventory calculations? Indicate the effect (and amount) as either (a) none, (b) understated $______, or (c) overstated $______.

 
Inventory Item None or amount? Understated or overstated?
Beginning Inventory    
Purchases    
Goods Available for Sale    
Ending Inventory    
Cost of Goods Sold    
Table 10.2
EB 14.

LO 10.4If Barcelona Company’s ending inventory was actually $122,000, but the cost of consigned goods, with a cost value of $20,000 were accidentally included with the company assets, when making the year-end inventory adjustment, what would be the impact on the presentation of the balance sheet and income statement for the year that the error occurred, if any?

EB 15.

LO 10.4Tanke Company reported net income on the year-end financial statements of $850,200. However, errors in inventory were discovered after the reports were issued. If inventory was overstated by $21,000, how much net income did the company actually earn?

EB 16.

LO 10.5Compute Westtown Company’s (A) inventory turnover ratio and (B) number of days’ sales in inventory ratio, using the following information.

Cost of Goods Sold $156,000. Beginning Inventory 14,500. Ending Inventory 17,500.
EB 17.

LO 10.5Complete the missing pieces of Delgado Company’s inventory calculations and ratios.

Beginning Inventory $25,000. Purchases 132,000. Goods Available for Sale 157,000. Ending Inventory 27,000. Cost of Goods Sold ?. Turnover Ratio 5,0. Days’ Sales in Inventory ?.
Order a print copy

As an Amazon Associate we earn from qualifying purchases.

Citation/Attribution

This book may not be used in the training of large language models or otherwise be ingested into large language models or generative AI offerings without OpenStax's permission.

Want to cite, share, or modify this book? This book uses the Creative Commons Attribution-NonCommercial-ShareAlike License and you must attribute OpenStax.

Attribution information
  • If you are redistributing all or part of this book in a print format, then you must include on every physical page the following attribution:
    Access for free at https://openstax.org/books/principles-financial-accounting/pages/1-why-it-matters
  • If you are redistributing all or part of this book in a digital format, then you must include on every digital page view the following attribution:
    Access for free at https://openstax.org/books/principles-financial-accounting/pages/1-why-it-matters
Citation information

© Dec 13, 2023 OpenStax. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike License . The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo are not subject to the Creative Commons license and may not be reproduced without the prior and express written consent of Rice University.