Connect Access Card for Intermediate Accounting

9th Edition

ISBN: 9781260029871

Author: J. David Spiceland, Wayne M Thomas, Mark W. Nelson

Publisher: McGraw-Hill Education

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Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.

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Textbook Question

Chapter 9, Problem 9.8BYP

Real World Case 9–8

Various inventory issues; Chapters 8 and 9; Fred’s Inc.

• LO9–1, LO9–5, LO9–6

Real World Financials

Fred’s Inc. operates general merchandise retail discount stores and full-service pharmacies in the Southeastern United States. Access the company’s 10-K for the fiscal year ended January 30, 2016. You can find the 10-K by using EDGAR at www.sec.gov. Answer the following questions.

Required:

1. What inventory methods does Fred’s use to value its inventory?

2. Which price index does the company use in applying the retail inventory method?

3. A company that uses LIFO is allowed to provide supplemental disclosures reporting the effect of using another inventory method rather than LIFO. Using the supplemental LIFO disclosures provided by Fred’s, determine the income effect of using LIFO versus another method for the current fiscal year.

4. Calculate the company’s inventory turnover ratio for the fiscal year ended January 30, 2016.

5. Assume that in the next fiscal year the company decides to switch to the average cost method. Describe the accounting treatment required for the switch.

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Chapter 9, Problem 9.7BYP

Chapter 9, Problem 9.9BYP

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Chapter 9 Solutions

Connect Access Card for Intermediate Accounting

Ch. 9 - Explain the (a) lower of cost or net realizable...Ch. 9 - What are the various levels of aggregation to...Ch. 9 - Describe the alternative approaches for recording...Ch. 9 - Explain the gross profit method of estimating...Ch. 9 - The Rider Company uses the gross profit method to...Ch. 9 - Explain the retail inventory method of estimating...Ch. 9 - Both the gross profit method and the retail...Ch. 9 - Define each of the following retail terms: initial...Ch. 9 - Explain how to estimate the average cost of...Ch. 9 - Prob. 9.10Q

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Solution Summary: The author explains how Company F uses FIFO (First-in-First Out) retail inventory method and the dollar-value LIFO retail method to value its inventories.

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Chapter 9 Solutions