A local Chevrolet dealership carries the following types of vehicles: Inventory Items Quantity Unit NRV Vans Unit Cost $19,000 16,400 $17,000 Trucks 15,400 11,400 13,400 15,400 2 door sedans 4-door sedans Sports cars SUVS 18,400 29,000 32,000 26,880 20,000 Because of recent increases in gasoline prices, the car dealership has noticed a reduced demand for its SUVs, vans, and trucks. Determine the financial statement effects of using lower of cost and net reali Determine the financial statement effects of using lower of cost and net realizable value to report inventory. (Make sure to enter amounts leading to account reduction with a minus sign.) Revenues Assets Income Statement: Balance Sheet: Expenses Liabilities Net Income Stockholders' Equity

A local Chevrolet dealership carries the following types of vehicles: Inventory Items Quantity Unit NRV Vans Unit Cost $19,000 16,400 $17,000 Trucks 15,400 11,400 13,400 15,400 2 door sedans 4-door sedans Sports cars SUVS 18,400 29,000 32,000 26,880 20,000 Because of recent increases in gasoline prices, the car dealership has noticed a reduced demand for its SUVs, vans, and trucks. Determine the financial statement effects of using lower of cost and net reali Determine the financial statement effects of using lower of cost and net realizable value to report inventory. (Make sure to enter amounts leading to account reduction with a minus sign.) Revenues Assets Income Statement: Balance Sheet: Expenses Liabilities Net Income Stockholders' Equity

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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4) One of the managers of the business has indicated that his main objective is to cut back on his tax liability as much as possible and is of the view that the FIFO method would be best. Do you agree with him? Explain your answer clearly, with reference to the most popular methods of inventory valuation. 5) Universal Enterprise sells a product that cost $450 per unit and has a monthly demand of 5,000 units. The annual holding cost per unit is calculated as 5% of the unit purchase price. It costs the business $75 to place a single order. Currently the business places 12 orders each year. i) What is the total stock administrative cost of Universal’s current inventory policy? ii) Is this the entity’s cost minimizing solution for this product each year? Explain.
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Richardson Company cans a variety of vegetable-type soups. Recently, the company decided to value its inventories using dollar-value LIFO pools. The clerk who accounts for inventories does not understand how to value the inventory pools using this new method, so, as a private consultant, you have been asked to teach him how this new method works. He has provided you with the following information about purchases made over a 6-year period. Date Ending Inventory(End-of-Year Prices) Price Index Dec. 31, 2016 $ 80,000 100 Dec. 31, 2017 111,300 105 Dec. 31, 2018 108,000 120 Dec. 31, 2019 128,700 130 Dec. 31, 2020 147,000 140 Dec. 31, 2021 174,000 145 You have already explained to him how this inventory method is maintained, but he would feel better about it if you were to leave him detailed instructions explaining how these calculations are done and why he needs to put all inventories at a base-year value. Instructions a. Compute the ending inventory for…
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