Keller Company began operations on January 1, 2019, adopting the conventional retail inventory system. None of the company's merchandise was marked down in 2019 and, because there was no beginning inventory, its ending inventory for 2019 of $38,100 would have been the same under either the conventional retail system or the LIFO retail system. On December 31, 2020, the store management considers adopting the LIFO retail system and desires to know how the December 31, 2020, inventory would appear under both systems. All pertinent data regarding purchases, sales, markups, and markdowns are shown below. There has been no change in the price level. Inventory, Jan. 1, 2020 Markdowns (net) Markups (net) Purchases (net) Sales (net) Cost $38,100 130,900 Determine the cost of the 2020 ending inventory under both (a) the conventional retail method and (b) the LIFO retail method. (Round ratios for computational purposes to 2 decimal place, e.g. 78.72% and final answers to 0 decimal places, e.g. 28,987.) (a) Ending inventory using conventional retail method (b) Ending inventory LIFO retail method x Retail $60,000 13,000 22,000 178,000 167,000 X 81000 52286

Keller Company began operations on January 1, 2019, adopting the conventional retail inventory system. None of the company's merchandise was marked down in 2019 and, because there was no beginning inventory, its ending inventory for 2019 of $38,100 would have been the same under either the conventional retail system or the LIFO retail system. On December 31, 2020, the store management considers adopting the LIFO retail system and desires to know how the December 31, 2020, inventory would appear under both systems. All pertinent data regarding purchases, sales, markups, and markdowns are shown below. There has been no change in the price level. Inventory, Jan. 1, 2020 Markdowns (net) Markups (net) Purchases (net) Sales (net) Cost $38,100 130,900 Determine the cost of the 2020 ending inventory under both (a) the conventional retail method and (b) the LIFO retail method. (Round ratios for computational purposes to 2 decimal place, e.g. 78.72% and final answers to 0 decimal places, e.g. 28,987.) (a) Ending inventory using conventional retail method (b) Ending inventory LIFO retail method x Retail $60,000 13,000 22,000 178,000 167,000 X 81000 52286

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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During the year ended December 31, 2021, Angel Company revealed the following events: a) A counting error relating to inventory on December 31, 2020 was discovered. This required an increase in the carrying amount of inventory on that date of P500,000. b)It was also decided to write off P50,000 from inventory which was over two years old as it was obsolete. c) The provision for uncollectible accounts on December 31, 2020 was P200,000. During 2021, an amount of P300,000 was written off on the December 31, 2020 accounts receivable. What pretax adjustment is required to restate retained earnings on January 1, 2021?
Williams maintains its records of inventory on a perpetual basis using the first-in, first-out (FIFO) method. Calculate the amount of ending Merchandise Inventory on December 31, 2020 using the lower-of-cost-or-market rule.
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Pomelo Company has the policy of valuing inventory at the lower of cost and net realizable value using the allowance method. Allowance to Reduce Inventory to NRV account at December 31, 2021 before adjustment is P86,000. Analysis of the net realizable value and costs of their products on December 31, 2021 revealed a valuation at the lower of cost and net realizable value of P1,200,000 applied to the individual products. The total cost of its products on that date is P1,300,000. How much is the loss from decline in NRV that Pomelo Company should report in profit or loss for the year ended December 31, 2021? *
Lumen INC. is preparing its 2021 year-end financial statements. Prior to any adjustments, inventory is valued at P76,050, based on a physical count. The following information has been found relating to certain inventory transactions.I. Goods valued at P 11,000 are on consignment with a customer. These goods are not included in the P76,050 inventory figure. Which of the following statements is true?a. There is no effect on the 2021 ending inventory.b. 2021 ending inventory is overstated.c. The 2021 net income is overstated.d. The 2021 net income is understated.Please included an explaination.
Assume the perpetual inventory system is used unless stated otherwise.Accounting principles for inventory and applying the lower-of-cost-or-market rule Some of M and C Electronics’s merchandise is gathering dust. It is now December 31, 2018, and the current replacement cost of the ending merchandise inventory is $24,000 below the business’s cost of the goods, which was $97,000. Before any adjustments at the end of the period, the company’s Cost of Goods Sold account has a balance of $380,000. Requirements Journalize any required entries. At what amount should the company report merchandise inventory on the balance sheet? At what amount should the company report cost of goods sold on the income statement? Which accounting principle or concept is most relevant to this situation?
1. In 2021, Jules Company realized that its ending inventory was understated by P1,500 in 2019. How should Jules Company handle this? a. An adjustment to reduce inventory by P1,500 needs to be made b. An adjustment to increase cost of goods sold by P1,500 needs to be made. c. An adjustment to increase inventory by P1,500 needs to be made d. No adjustment needs to be made. 2. For interim reporting, a gain on disposal of land occurring in the third quarter is a. Recognized and allocated over the quarters b. Recognized and allocated over four quarters c. Recognized immediately in the third quarter d. Deferred until the annual reporting
At the end of 2018, the Biggie Company performed its annual physical inventory count. John Lawrence, themanager in charge of the physical count, was told that an additional $22,000 in inventory that had been sold andwas in transit to the customer should be included in the ending inventory balance. John was of the opinion that themerchandise shipped should be excluded from the ending inventory since Biggie was not in physical possessionof the merchandise.Required:Discuss the situation and indicate why John’s opinion might be incorrect.
During 2021, P Company discovered that the ending inventories reported on its financial statements were incorrect by the following amounts: 2019 $ 120,000 understated 2020 $ 150,000 overstated *Note any error of 2019 ending inventory is carried over to 2020 as an error of the beginning inventory. P uses the periodic inventory system to ascertain year-end quantities that are converted to dollar amounts using the FIFO cost method. Prior to any adjustments for these errors and ignoring income taxes, P's retained earnings at January 1, 2021, would be: O Correct. O $30,000 overstated O $150,000 overstated. O $270,000 overstated.
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