Exercise 1

Brown Company provides the following data:

Items counted in the bodegaS 4,000,000

Items included in the count specifically segregated per sale contract 100,000

Items in receiving department, returned by customer, in good condition 50,000

Items ordered and in the receiving department 400,000

Items ordered, invoice received but goods not received.

Freight is on account of seller300,000

Items shipped today, invoice mailed, FOB shipping point 250,000

Items shipped today, invoice mailed, FOB destination150,000

Items currently being used for window display200,000

Items on counter for sale800,000

Items in receiving department, refused because of damage180,000

Items included in count, damage and unsalable50,000

Items in the shipping department250,000

What is the correct amount of inventory?

Exercise 2

Crystal Company accumulated the following data for the current year.

Raw materials-beginning inventory90,000 units @ $ 7.00

Purchases75,000 units @ $ 8.00

Purchases120,000 units @ $ 8.50

The entity transferred 195,000 units of raw materials to work in process during the year.

Work in process-beginning inventory50,000 units @ $ 14.00

Direct labour$ 3,100,000

Manufacturing overhead$ 2,950,000

Work in process-ending inventory48,000 units @ $ 15.00

The entity used the FIFO method for valuing inventory.

1.What is the cost of raw materials used?

2.What is the total manufacturing cost?

3.What is the cost of goods manufactured for the current year?

Exercise 3

Zoey Company sold merchandise at a gross profit of 30%. On April 30, the entire inventory was destroyed by fire. The entity provided the following information for the six months ended April 30:

Net Sales$ 8,000,000

Beginning inventory2,000,000

Net purchases5,200,000

What is the estimated cost of the destroyed inventory?

Exercise 4

Chloe Company used the retail inventory method to approximate the ending inventory.

CostRetail

Beginning inventory$ 650,000 $ 1,200,000

Purchases9,000,000 14,700,000

Freight in200,000

Purchase returns 300,000500,000

Purchase allowances150,000

Departmental transfer in200,000300,000

Markup400,000

Markup cancellation100,000

Markdown1,200,000

Markdown cancellation200,000

Sales9,500,000

Sales discounts100,000

Employee discounts500,000

Estimated normal shoplifting loss600,000

Estimated normal shrinkage400,000

1.What is the estimated cost of ending inventory using the conservation approach?

2.What is the estimated cost of ending inventory using average cost approach?

Exercise 5

Francois Company used FIFO retail method of inventory valuation. The entity provided the following information for the current year:

Cost Retail

Beginning inventory$600,000$ 1,500,000

Purchases 3,000,0005,500,000

Net markups500,000

Net markdowns1,500,000

Sales revenue4,500,000

What is the estimated cost of ending inventory?