Chapter 5: Quick Study

QS 5-1: Inventory Ownership Emma’s inventory at the end of the period consists of: 1. 1,300 units in the basement, but 20 are damaged and unsellable. o Include: 1,300 - 20 = 1,280 units. 2. 350 units in her van ready for delivery under FOB destination. o Do not include: Inventory is counted when it reaches the customer. 3. 80 units out on consignment. o Include: Consigned goods remain in Emma’s inventory until sold. Total units in inventory = 1,280 + 80 = 1,360 units. QS 5-2: Inventory Costs (Car Dealer) To compute the total inventory costs, include only costs related to acquiring the car and preparing it for sale: • • • • $14,000 for the car. $250 for transportation-in. $300 for shipping insurance. $900 for import duties. Other costs like advertising, sales salaries, and landscaping are excluded. Total inventory costs = $14,000 + $250 + $300 + $900 = $15,450. QS 5-3: Inventory Costs (Solar Panel Dealer) For the solar panel, include costs associated with acquiring and restoring the panel for sale: • • • • $9,000 for the panel. $135 for shipping insurance. $280 for transportation-in. $550 for restoration. Sales salaries and lawn care are excluded. Total inventory costs = $9,000 + $135 + $280 + $550 = $9,965. QS 5-4: Computing Goods Available for Sale Given purchases: • • • • • Beginning inventory: 10 units at $60 = $600 Week 1: 10 units at $61 = $610 Week 2: 10 units at $62 = $620 Week 3: 10 units at $65 = $650 Week 4: 10 units at $70 = $700 Total units available: 10 + 10 + 10 + 10 + 10 = 50 units. Cost of goods available for sale = $600 + $610 + $620 + $650 + $700 = $3,180. QS 5-5: Perpetual Inventory Costing (FIFO) Assume purchases: • • • • Beginning inventory: 200 units at $10 = $2,000 January 5 purchase: 200 units at $12 = $2,400 January 18 purchase: 100 units at $14 = $1,400 Sold: 350 units Ending inventory: • • 150 units remain (FIFO keeps the most recent purchases in inventory). The 150 units consist of: o 100 units from January 18 at $14 = $1,400 o 50 units from January 5 at $12 = $600 Total ending inventory = $2,000. QS 5-6: Perpetual Inventory Costing (LIFO) Assume the same purchases and sale as in QS 5-5: • LIFO sells the most recent purchases first. Ending inventory: • The 150 units consist of: o 200 units from beginning inventory at $10 = $1,500 (since only 150 units are left, we stop after using this). Total ending inventory = $1,500. QS 5-7: Perpetual Inventory Costing (Weighted Average) Same purchases as in QS 5-5. 1. Total cost of goods available for sale = $2,000 + $2,400 + $1,400 = $5,800. 2. Total units available for sale = 200 + 200 + 100 = 500 units. 3. Weighted average cost per unit = $5,800 ÷ 500 = $11.60 per unit. 4. Ending inventory = 150 units × $11.60 = $1,740. QS 5-8A: Periodic Inventory Costing (FIFO) Same purchases as in QS 5-5, but using the periodic system. Ending inventory: • • 150 units remain, and FIFO uses the earliest purchases for COGS. The 150 units consist of: o 100 units from January 18 at $14 = $1,400 o 50 units from January 5 at $12 = $600 Total ending inventory = $2,000. QS 5-9A: Periodic Inventory Costing (LIFO) For periodic LIFO: • • 150 units remain, and LIFO uses the latest purchases for COGS. The 150 units consist of: o 150 units from the beginning inventory at $10 = $1,500. Total ending inventory = $1,500. QS 5-10A: Periodic Inventory Costing (Weighted Average) Same data as above: 1. 2. 3. 4. Total cost of goods available = $5,800. Total units available = 500. Weighted average cost per unit = $11.60. Ending inventory = 150 units × $11.60 = $1,740. These solutions provide the total ending inventory and cost of goods sold based on different inventory costing methods under both perpetual and periodic systems.