Ch. 8 Valuation of Inventories A Cost - Basis Approach Solutions Problem 8-9 | Concordia University Wisconsin - Edubirdie

University:
Concordia University Wisconsin
Course:
ACCT 3100 | Intermediate Accounting I
Academic year:

2021
Views:

484

Pages:

1
Author:

Alexa Livingston

PROBLEM 8-9 (a) BONANZA WHOLESALERS INC. Computation of Internal Conversion Price Index for Inventory Pool No. 1 Double Extension Method Current inventory at current-year cost Product A Product B 17,000 X $36 = 9,000 X $26 = Current inventory at base cost Product A Product B 17,000 X $30 = 9,000 X $25 = 2017 $612,000 234,000 $846,000 $510,000 225,000 $735,000 Conversion price index $846,000 ÷ $735,000 = 1.15 (b) 13,000 X $30 = 10,000 X $25 = 2018 $520,000 320,000 $840,000 $390,000 250,000 $640,000 $840,000 ÷ $640,000 = 1.31 BONANZA WHOLESALERS INC. Computation of Inventory Amounts Under Dollar-Value LIFO Method for Inventory Pool No. 1 at December 31, 2017 and 2018 Current Inventory at base cost December 31, 2017 Base inventory 2017 layer ($735,000 – $525,000) Total $525,000 210,000 $735,000 December 31, 2018 Base inventory 2017 layer (remaining) Total $525,000 115,000 (b) $640,000 (a) (a) (b) 13,000 X $40 = 10,000 X $32 = Conversion price index 1.00 1.15 (a) $525,000 241,500 $766,500 1.00 1.15 (a) $525,000 132,250 $657,250 (a) Per schedule for instruction (a). After liquidation of $95,000 base cost ($735,000 – $640,000). LO: 4, Bloom: AP, Difficulty: Moderate, Time: 25-35, AACSB: Analysis , AICPA BB: None Reporting, AICPA PC:, AICPA BB: None 8-55 Inventory at LIFO cost

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