CHAPTER6 Iventory Costing and Valuation Lutulemon Athletica Inc. discloses the following significant accounting policy over inventory in its February 2, 2014 Annual Report Inventores, consiting of tnished goodsand raw materials, are statedatthe lower ofcoat and markvalue Cost is de- termined using welghted-average coets Por finlsbed goods, market is defined as net realirable value, and Sor nw mater als, market is defined as replacement cost. Cost of inventorles Includes sequisitdon and prodoction costs laciudingrw material and labor, as applicable, and al costs Incurred to deliver Investory, to the Compang's distrlbution centers baicrad- Ing trelght, non-refundable taxes, duity and other landing costs Procter &Gamble Company discloses the follorving combination of costing methods it applies to difer ent segments of its inventory in its June 30, 2014 Annual Report Inventories are valued at the lower of cost or first-in, first-out method. Minor amounts of product inventories tained on the last-in, first-out method The cost of spare part inventorles is market valoe Product-related inventories are prlmarig malotalned on the coesnetias and commodities, are matn- including certaln maintained using the average-cost method Tifany& Co. discloses its accounting policy for inventory in its January 81, 2014 annual report as follows: Inventories are valued at the lower of cost or market using the average cost method except for certaln diamond and gemstone jewelrng, which uses the specific identificatlon method. We use fictitious information from MEC, the sporting goods store introduced In the Chapter 5 chapter opening vignette, to illustrate the three methods. Among Its many products, assume MEC carries one tupe of mountain bike. Its mountain bike Cunlt) inventory at the beginning of August 2017 and Its pur- chases during August are shown in Exhibit 6.2. EXHIBIT 6.2 Cost of Goods Available for Sale Total Cost Ueits 10 $91 910 15$106$1,590 20 $115$2.300 $4,800 Aug. 1 Beginning Inventory 3 Purchased 45 Units Total goods available for sale.. avallable for sale Total cost of goods that were available for sale MEC had two sales of mountain bikes to two different biking clubs in August, as shown in Exhibit 6.3. MEC ends August with I1 bikes in inventory (45 units available for sale less 34 units sold). EXHIBIT 6.3 Retail Sales of Goods Selling Price Per Unit Total Sales Units $133$2,660 Aug. 14 Sales 28 Sales 14 @ S150 $2.100 34 Units $4,760 Problem 6-2A Alternative cost flows-perpetual Lo2 eXcel CHECK FIGURES: 1. Ending inventory: a. $27,520.00; b. $27,274.00; 2. Ending inventory $27,36.00 The Stilton Company has the following inventory and credit purchases during the fiscal year ended December 31, 2017. Beginning.... 500 units $85/unit Feb. 10 Aug. 21 250 units $82/unit ...130 units $95/unit Stilton Company has two credit sales during the period. The units have a selling price of $145.00 per unit. Sales 330 units .. 235 units Sept. 10.. Stilton Company uses a perpetual inventory system. Required Calculate the dollar value of cost of goods sold and ending inventory using: . FIFO b Moving weighted average. Round to two decimal places 1. . Calculate the dollar value of cost of goods sold and ending inventory using specific identification, assuming the sales were specifically identified as follows: 170 160 units from beginning inventory. and units from the February 10 purchase Mar. 15: 165 20 50 units from beginning inventory, and units from the February 10 purchase, and units from the August 21 purchase Sept.10: 3. Using information from your answers in Parts 1 and 2, journalize the credit purchase on Feb 10 and the credit sale on September 10 for each of a. FIFO b. Moving weighted average c. Specific identification. 440