Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 9, Problem 9.18P
Purchase commitments
• Appendix
In November 2018, the Brunswick Company signed two purchase commitments. The first commitment requires Brunswick to purchase 10,000 units of inventory at $10 per unit by December 15, 2018. The second commitment requires the company to purchase 20,000 units of inventory at $11 per unit by March 15, 2019. Brunswick’s fiscal year-end is December 31. The company uses a periodic inventory system. Both contracts were exercised on their expiration date.
Required:
- 1. Prepare the
journal entry to record the December 15 purchase for cash assuming the following alternative unit market prices on that date:- a. $10.50
- b. $ 9.50
- 2. Prepare any necessary
adjusting entry at December 31, 2018, for the second purchase commitment assuming the following alternative unit market prices on that date:- a. $12.50
- b. $10.30
- 3. Assuming that the unit market price on December 31, 2018, was $10.30, prepare the journal entry to record the purchase on March 15, 2019, assuming the following alternative unit market prices on that date:
- a. $11.50
- b. $10.00
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Dollar-Value LIFO
Belstock Company manufactures one product. On December 31, 2018, Belstock adopted the dollar-value LIFO inventory method. The inventory on that date using the dollar-value LIFO inventory method was $200,000. Inventory data for succeeding years are as follows:
Year
Inventory at RespectiveYear-End Prices
Price Index(Base Year 2018)
2019
$220,500
1.05
2020
287,500
1.15
2021
276,000
1.20
Required:
Compute the ending inventory using the dollar-value LIFO method for 2019, 2020, and 2021. Do not round your intermediate calculations. If required, round your answers to the nearest dollar.
December 31, 2019
December 31, 2020
December 31, 2021
Crane Corporation sells item A as part of its product line. Information as to balances on hand, purchases, and sales of item
A are given in the following table for the first six months of 2020.
Date
January 11
January 24
February 8
March 16
June 11
Quantities
Purchased
1,300
630
Sold
330
605
Balance
Unit Price of
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430
1,730
1,400
795
1,425
$4.60
$4.80
$5.30
(a)
Compute the ending inventory at June 30 under the perpetual LIFO inventory pricing method.
Ending inventory $
Compute the cost of goods sold for the first 6 months under the periodic FIFO inventory pricing method.
Cost of Goods Sold $
Dollar-Value LIFO
Belstock Company manufactures one product. On December 31, 2018, Belstock adopted the dollar-value LIFO inventory method. The inventory on
that date using the dollar-value LIFO inventory method was $200,000. Inventory data for succeeding years are as follows:
Inventory at Respective
Price Index
Year
Year-End Prices
(Base Year 2018)
2019
$220,500
1.05
2020
287,500
1.15
2021
288,000
1.20
Required:
Compute the ending inventory using the dollar-value LIFO method for 2019, 2020, and 2021. Do not round your intermediate calculations. If
required, round your answers to the nearest dollar.
December 31, 2019 $
December 31, 2020
December 31, 2021 $
Chapter 9 Solutions
Intermediate Accounting
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Ch. 9 - Explain the LIFO retail inventory method.Ch. 9 - Discuss the treatment of freight-in, net markups,...Ch. 9 - Explain the difference between the retail...Ch. 9 - Prob. 9.14QCh. 9 - Prob. 9.15QCh. 9 - Explain the accounting treatment of material...Ch. 9 - It is discovered in 2018 that ending inventory in...Ch. 9 - Identify any differences between U.S. GAAP and...Ch. 9 - (Based on Appendix 9) Define purchase commitments....Ch. 9 - (Based on Appendix 9) Explain how purchase...Ch. 9 - Lower of cost or net realizable value LO91 Ross...Ch. 9 - Lower of cost or net realizable value LO91 SLR...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Prob. 9.5BECh. 9 - Gross profit method; solving for unknown LO92...Ch. 9 - Retail inventory method; average cost LO93 Kiddie...Ch. 9 - Retail inventory method; LIFO LO93 Refer to the...Ch. 9 - Conventional retail method LO94 Refer to the...Ch. 9 - Conventional retail method LO94 Roberson...Ch. 9 - Dollar-value LIFO retail LO95 On January 1, 2018,...Ch. 9 - Dollar-value LIFO retail LO95 This exercise is a...Ch. 9 - Change i n inventory costing methods LO96 In...Ch. 9 - Change in inventory costing methods LO96 In 2018,...Ch. 9 - Inventory error LO97 In 2018, Winslow...Ch. 9 - Inventory error LO97 Refer to the situation...Ch. 9 - Lower of cost or net realizable value LO91 Herman...Ch. 9 - Lower of cost or net realizable value LO91 The...Ch. 9 - Lower of cost or net realizable value LO91 Tatum...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Prob. 9.8ECh. 9 - Prob. 9.9ECh. 9 - Prob. 9.10ECh. 9 - Gross profit method LO92 Royal Gorge Company uses...Ch. 9 - Prob. 9.12ECh. 9 - Retail inventory method; average cost LO93 San...Ch. 9 - Prob. 9.14ECh. 9 - Retail inventory method; LIFO LO93 Crosby Company...Ch. 9 - Prob. 9.16ECh. 9 - Conventional retail method; employee discounts ...Ch. 9 - Retail inventory method; solving for unknowns ...Ch. 9 - Dollar-value LIFO retail LO95 On January 1, 2018,...Ch. 9 - Prob. 9.20ECh. 9 - Dollar-value LIFO retail LO95 Lance-Hefner...Ch. 9 - Prob. 9.22ECh. 9 - Change in inventory costing methods LO96 In 2018,...Ch. 9 - Prob. 9.24ECh. 9 - Error correction; inventory error LO97 During...Ch. 9 - Prob. 9.26ECh. 9 - Inventory error LO97 In 2018, the internal...Ch. 9 - Inventory errors LO97 In 2018, the controller of...Ch. 9 - Concepts; terminology LO91 through LO97 Listed...Ch. 9 - Prob. 9.30ECh. 9 - Prob. 9.31ECh. 9 - Lower of cost or net realizable value LO91 Decker...Ch. 9 - Prob. 9.2PCh. 9 - Lower of cost or market LO91 Forester Company has...Ch. 9 - Prob. 9.4PCh. 9 - Prob. 9.5PCh. 9 - Prob. 9.6PCh. 9 - Retail inventory method; conventional and LIFO ...Ch. 9 - Prob. 9.8PCh. 9 - Prob. 9.9PCh. 9 - Dollar-value LIFO retail method LO95 [This is a...Ch. 9 - Dollar-value LIFO retail LO95 On January 1, 2018,...Ch. 9 - Retail inventory method; various applications ...Ch. 9 - Retail inventory method; various applications ...Ch. 9 - Prob. 9.14PCh. 9 - Inventory errors LO97 You have been hired as the...Ch. 9 - Inventory errors LO97 The December 31, 2018,...Ch. 9 - Integrating problem; Chapters 8 and 9; inventory...Ch. 9 - Purchase commitments Appendix In November 2018,...Ch. 9 - Judgment Case 91 Inventoriable costs; lower of...Ch. 9 - Integrating Case 93 FIFO and lower of cost or net...Ch. 9 - Prob. 9.4BYPCh. 9 - Prob. 9.5BYPCh. 9 - Prob. 9.6BYPCh. 9 - Prob. 9.7BYPCh. 9 - Real World Case 98 Various inventory issues;...Ch. 9 - Prob. 9.9BYPCh. 9 - Judgment Case 910 Inventory errors LO97 Some...Ch. 9 - Ethics Case 911 Overstatement of ending inventory ...Ch. 9 - Analysis Case 912 Purchase commitments Appendix...Ch. 9 - Continuing Cases Target Case LO93, LO94, LO95...Ch. 9 - Prob. 1CCIFRS
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