INTERM.ACCT.:REPORTING...-CENGAGENOWV2
3rd Edition
ISBN: 9781337909358
Author: WAHLEN
Publisher: CENGAGE L
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Question
Chapter 8, Problem 7C
1a.
To determine
Determine the criteria to be used for finding which D’s cost is inventoriable.
1b.
To determine
Explain whether D’s administrative costs are inventoriable.
2a.
To determine
Provide reasons for usage of lower of costs or market rule for wholesale inventories.
2b.
To determine
Describe the amount used for
3.
To determine
Describe the treatment of beginning inventories and net markdowns while making calculation of cost ratio to find the ending inventories.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Huddell Company, which is both a wholesaler and retailer, purchases merchandise from various suppliers. Thedollar-value LIFO method is used for the wholesale inventories.Huddell determines the estimated cost of its retail ending inventories using the conventional retail inventorymethod, which approximates lower of average cost or market.Required:1. a. What are the advantages of using the dollar-value LIFO method as opposed to the traditional LIFOmethod?b. How does the application of the dollar-value LIFO method differ from the application of the traditionalLIFO method?2. a. In the calculation of the cost-to-retail percentage used to determine the estimated cost of its ending inventories, how should Huddell use∙ Net markups?∙ Net markdowns?b. Why does Huddell’s retail inventory method approximate lower of average cost or market?
AICPA Adapted Caddell Company, a wholesaler, purchases its inventories from various suppliers FOB destination. It incurs substantial warehousing costs. Caddell uses the dollar-value LIFO inventory cost flow method. Caddell also consigns some of its inventories to Reed Company.
Reed also has items for sale that it purchases from other wholesalers. Reed uses the lower of FIFO cost or market inventory method.
Required:
When are the purchases from various suppliers generally included in Caddell's inventory? Why?
Theoretically, how should Caddell account for the warehousing costs? Why?
Explain the advantages of using the dollar-value LIFO inventory cost flow method as opposed to the conventional quantity of goods LIFO method.
How does the calculation of dollar-value LIFO differ from the conventional quantity of goods method?
Explain how Caddell should account for the inventories consigned to Reed Company.
When Reed applies the lower of cost or market rule, what are the…
Garcia Company is trying to decide whether to purchase identical inventory from one of the following suppliers. Cost Invoice terms Shipping terms Shipping cost Supplier A $280 1/10, n/30 FOB shipping point $28 Supplier B $290 2/10, n/30 FOB destination $30 Required: Assume the company will pay within the discount period. What is the actual cost of the inventory if purchased from each supplier?
Chapter 8 Solutions
INTERM.ACCT.:REPORTING...-CENGAGENOWV2
Ch. 8 - Under what circumstances will a company value...Ch. 8 - What is the conceptual justification for reducing...Ch. 8 - Define the terms cost, net realizable value, and...Ch. 8 - For companies that use either LIFO or the retail...Ch. 8 - What three implementation approaches may a company...Ch. 8 - Describe the two approaches to recording the...Ch. 8 - Prob. 7GICh. 8 - In applying the inventory valuation rules to...Ch. 8 - Prob. 9GICh. 8 - What are the exceptions to historical cost...
Ch. 8 - Prob. 11GICh. 8 - Prob. 12GICh. 8 - What is the basic assumption underlying the gross...Ch. 8 - Prob. 14GICh. 8 - Prob. 15GICh. 8 - Explain the meaning of the following terms:...Ch. 8 - Prob. 17GICh. 8 - Prob. 18GICh. 8 - The retail inventory method indicated an inventory...Ch. 8 - Prob. 20GICh. 8 - Indicate the effect of each of the following...Ch. 8 - Sienna Company uses the FIFO cost flow assumption....Ch. 8 - Moore Company uses the LIFO cost flow assumption...Ch. 8 - A company uses the LIFO cost flow assumption. The...Ch. 8 - Prob. 4MCCh. 8 - Hestor Companys records indicate the following...Ch. 8 - Under the retail inventory method, freight-in...Ch. 8 - The retail inventory method would include which of...Ch. 8 - At December 31, 2019, the following information...Ch. 8 - Estimates of price-level changes for specific...Ch. 8 - A company forgets to record a purchase on credit...Ch. 8 - Brown Company has the following information...Ch. 8 - Black Corporation uses the LIFO cost flow...Ch. 8 - Blue Corporation uses the FIFO cost flow...Ch. 8 - Paul Corporation uses FIFO and reports the...Ch. 8 - Using the information provided in RE8-4, prepare...Ch. 8 - Kays Beauty Supply uses the gross profit method to...Ch. 8 - Uncle Butchs Hunting Supply Shop reports the...Ch. 8 - Use the information in RE8-7. Calculate Uncle...Ch. 8 - Use the information in RE8-7. Calculate Uncle...Ch. 8 - Use the information in RE8-7. Calculate Uncle...Ch. 8 - Johnson Corporation had beginning inventory of...Ch. 8 - Borys Companys periodic inventory at December 31,...Ch. 8 - Refer to the information provided in RE8-4. If...Ch. 8 - Refer to the information provided in RE8-4. If...Ch. 8 - Inventory Write-Down Stiles Corporation uses the...Ch. 8 - Inventory Write-Down Stiles Corporation uses the...Ch. 8 - Inventory Write-Down Byron Company has five...Ch. 8 - Inventory Write-Down The following information for...Ch. 8 - Inventory Write-Down The following information is...Ch. 8 - Inventory Write-Down The inventories of Berry...Ch. 8 - Prob. 7ECh. 8 - Gross Profit Method: Estimation of Flood Loss On...Ch. 8 - Prob. 9ECh. 8 - Gross Profit Method: Estimation of Theft Loss You...Ch. 8 - Retail Inventory Method Harmes Company is a...Ch. 8 - Retail Inventory Method The following data were...Ch. 8 - Retail Inventory Method The following information...Ch. 8 - Dollar-Value LIFO Retail Johns Company adopts the...Ch. 8 - Dollar-Value LIFO Retail Wyatt Company adopts the...Ch. 8 - Dollar-Value LIFO Retail On December 31, 2018,...Ch. 8 - Errors A company that uses the periodic inventory...Ch. 8 - Errors During the course of your examination of...Ch. 8 - (Appendix 8.1) Inventory Write-Down The...Ch. 8 - Inventory Write-Down Palmquist Company has five...Ch. 8 - Inventory Write-Down The following are the...Ch. 8 - Inventory Write-Down The inventory records of...Ch. 8 - Gross Profit Method: Estimation of Fire Loss On...Ch. 8 - Gross Profit Method: Estimation of Flood Loss On...Ch. 8 - Retail Inventory Method Turner Corporation uses...Ch. 8 - Retail Inventory Method EKC Company uses the...Ch. 8 - Retail Inventory Method Red Department Store uses...Ch. 8 - Retail Inventory Method Weber Corporation uses the...Ch. 8 - Dollar-Value LIFO Retail The following information...Ch. 8 - Dollar-Value LIFO Retail Intella Inc. adopted the...Ch. 8 - Prob. 12PCh. 8 - Errors As controller of Lerner Company, which uses...Ch. 8 - Comprehensive: Inventory Adjustments Layne...Ch. 8 - (Appendix 8.1) Inventory Write-Down The following...Ch. 8 - (Appendix 8.1) Inventory Write-Down Frost Companys...Ch. 8 - Prob. 1CCh. 8 - Sandberg Paint Company, your client, manufactures...Ch. 8 - Prob. 3CCh. 8 - Inventory Valuation Issues Hanlon Company...Ch. 8 - Gross Profit Shelly Corporation is an importer and...Ch. 8 - Prob. 6CCh. 8 - Prob. 7CCh. 8 - Various Inventory Issues Hudson Company, which is...Ch. 8 - Analyzing Starbucks Inventory Disclosures Obtain...Ch. 8 - Analyzing Moet Hennessy Louis Vuittons (LVMH)...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Lower of Cost or Market Merediths Appliance Store has the following data for the items in its inventory at the end of the accounting period: Required: 1. Compute the carrying value of Merediths ending inventory using the lower of cost or market rule applied on an item-by-item basis. 2. Prepare the journal entry required to value the inventory at lower of cost or market. 3. CONCEPTUAL CONNECTION What is the conceptual justification for valuing inventory at the lower of cost or market?arrow_forwardWalmart uses a perpetual inventory system. Which of the following is a reason why Walmart needs to take a physical inventory? To check the accuracy of the perpetual inventory records. O To determine cost of goods sold for the accounting period. O To compute inventory ratios. O All of the choices are correct.arrow_forwarda. What is the estimated cost of the ending inventory if the conservative approach was used? b. What is the estimated cost of the ending inventory if the average cost approach was used? c. What is the estimated cost of the ending inventory if the FIFO approach was used? Please present the solution in good accounting form.arrow_forward
- I need help calculating not only the net realizable value for all four products but also calculating the ending inventory using the LOWER OF COST OR MARKET METHOD for- individual items, category, and total inventory (Please Show Calculations).arrow_forwardMusicMagic specializes in sound equipment. Company records indicate the following data for a line of speakers: (Click the icon to view the data.) Read the requirements. Co Requirement 1. Determine the amounts that MusicMagic should report for cost of goods sold and ending inventory two ways: a. FIFO and b. LIFO. (MusicMagic uses a perpetual inventory system.) Start by determining the amounts that MusicMagic should report for cost of goods sold and ending inventory under a. FIFO. FIFO method cost of goods sold = FIFO method ending inventory = Data table Date Mar 1 Mar 2 Mar 7 Mar 13 Item Balance Purchase Sale Sale Print Quantity 14 5 7 6 Unit Cost $ Done 41 48 Sale Price $ 109 102 Xarrow_forwardPlease do not give image format and fast answeringarrow_forward
- MusicPlace specializes in sound equipment. Company records indicate the following data for a line of speakers (Click the icon to view the data) Read the requirements Requirement 1. Determine the amounts that MusicPlace should report for cost of goods sold and ending inventory two ways: a. FIFO and b. LIFO (MusicPlace uses a perpetual inventory system.) Start by determining the amounts that MusicPlace should report for cost of goods sold and ending inventory under a FIFO FIFO method cost of goods sold FIFO method ending inventory Determinie the amounts that MusicPlace should report for cost of goods sold and ending inventory under b. LIFO. LIFO method cost of goods sold LIFO method ending inventory Requirement 2. MusicPlace uses the FIFO method. Prepare the company's income statement for the month ended March 31, 2021, reporting gross profit. Operating expenses totaled $280, and the income tax rate was 40%. (Round answers to the nearest dollar) MusicPlace Income Statement Month Ended…arrow_forwardByron Company has five products in its inventory and uses the FIFO cost flow assumption. Specific data for each product are as follows: 1. what is the correct inventory value assuming the LCNRV rule is applied to each item of inventory? 2. What is the correct inventory value assuming the LCNRV rule is applied to the total of inventory? 3. Next Level Comment on any differences that result from applying the LCNRV rule to individual items coinpared to the total of inventory.arrow_forwardIf the company had purchased all its materials from the online marketplace, describe what inventory cost would be shown for all materials on hand based on the average transaction price. Explain if the inventory cost value is higher or lower than the value of all materials if using their standard price. If the company can freely choose the lower of the standard price or the average price in the online marketplace, explain what the lowest possible inventory cost of all materials on hand is. Identify whether there is a particular marketplace vendor who always sells at a price lower than the standard price cost of all materials on hand.arrow_forward
- Which of the following is not a step in the retail inventory method process? a.Compute the cost of goods available for sale. b.Compute the ending inventory at retail by subtracting sales at retail from goods available for sale at retail. c.Estimate the cost of the ending inventory by multiplying the ending inventory at retail by the cost-to-retail ratio. d.Compute the cost-to-retail ratio.arrow_forwardA home improvement store, like Lowe’s, carries the following items:Required:1. Compute the total cost of inventory.2. Determine whether each inventory item would be reported at cost or net realizable value. Multiply the quantity of each inventory item by the appropriate cost or NRV amount and place the total in the “Lower of Cost and NRV” column. Then determine the total of that column.3. Compare your answers in requirement 1 and requirement 2 and then record any necessary adjustment to write down inventory from cost to net realizable value.4. Discuss the financial statement effects of using lower of cost and net realizable value to report inventory.arrow_forwardYou have been asked by your boss to compute the ending inventory using the retail method. Explain the steps that you would use in calculating this.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeCentury 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
Chapter 6 Merchandise Inventory; Author: Vicki Stewart;https://www.youtube.com/watch?v=DnrcQLD2yKU;License: Standard YouTube License, CC-BY
Accounting for Merchandising Operations Recording Purchases of Merchandise; Author: Socrat Ghadban;https://www.youtube.com/watch?v=iQp5UoYpG20;License: Standard Youtube License