1. On January 1, 20- Parker Limited had a beginning inventory of 30 toilet seats which had cost the company $11 each. During the year, the following purchase transactions took place: - March 21 Purchased 20 units for $11 - August 7 Purchased 40 units for $12 - November 18 Purchased 10 units for $13 - December 23 Purchased 20 units for $13 Also, the records indicate that during the year, the company sold 70 units. Instructions: i) Determine the cost of goods available for sale, assuming that the company is using a periodic inventory system. (2 Marks T) ii) Determine (1) the cost of goods sold and (2) the cost of the ending inventory under each of the three cost flow assumptions (FIFO, weighted average, and LIFO). (12 Marks A) 2. Johnson Art Sales uses the perpetual inventory system. On September 30, 20-, the company's year end, a physical count was taken of the inventory on hand. The cost of the inventory on hand was determined to be $325,400. However, the accountant has questions about the following items: a) On the store shelves, the staff counted 7 paintings held by Johnson on consignment from a local artist. The paintings are included in the inventory count at a cost of $4,200. b) On September 30, a shipment of goods was sent to a customer, FOB destination. The cost of the goods shipped is $7,800, and freight, which is to b3 paid by Johnson, will cost $200. Thee items are not included in the inventory count. c) On October 2, a freight company delivered goods that cost $10,000 to Johnson's warehouse. The goods had been shipped by the vendor on September 29, FOB shipping point. Freight on this shipment will amount to $500 and will be paid by the appropriate party. The goods are not included in the inventory count. d) On September 30, a loyal customer visited Johnon's Art Sales and selected a painting that she wanted to purchase and paid for it in full. The sales price for the painting was $3,500 and the cost was $2,200. The customer intends to send a truck to pick up the painting no later than October 2. The freight will cost $50 and will be paid by the customer. A "Sold" sign has been placed on the painting but it is still on display in the store. Instructions: i) Calculate the correct inventory balance at September 30, 20- (4 Marks A) ii) For each of the above items, explain why you included or did not include the inventory items in your final count ( 5 Marks C) 3. Jaguar Auto Parts reported the following information in its income statements for 2021 and 2022. The company uses the periodic system of inventory management: While completing Jaguar's 2023 financial statements, the accountant realized that errors had been made in previous year's inventory calculations. The correct ending inventory at December 31,2020 was $4,000, the correct ending inventory at December 31,2021 was $5,000, and the correct ending inventory at December 31,2022 was $3,000. Instructions: i) Calculate the correct cost of goods sold and gross profit for 2021 and 2022 ( 6 Marks A) ii) Calculate the inventory turnover for 2021 and 2022 using: *the originally reported information (2 Marks T) *the corrected information (2 Marks T) iii) Explain how the errors will have caused management's performance to be improperly evaluated (2 Marks T)
