Lower-of-Cost-or-Market Inventory On the basis of the following data, determine the value of the inventory at the lower of cost or market. Assemble the data in the form illustrated in Exhibit 9. Inventory Item Inventory Quantity Cost per Unit Market Value per Unit (Net Realizable Value) Birch $68 Cypress Mountain Ash Spruce 149 256 Willow Inventory at the Lower of Cost or Market Total Lower of C or M Inventory Item Birch Total Cost Total Market S Cypress Mountain Ash Spruce Willow Total Perpetual Inventory Using FIFO Beginning inventory, purchases, and sales data for portable DVD players are as follows: Apr. 1 Inventory 38 units @ 597 Sale 32 units Purchase 22 units @ 5101 Sale 13 units Sale 11 units Purchase 30 units @ $105 The business maintains a perpetual inventory system, costing by the first-in, first-out method. Determine the cost of the merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 3. a. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Merchandise Sold Unit Cost column and in the Inventory Unit Cost column. Cost of the Merchandise Sold Schedule First-in, First-out Method Portable DVD Players Purchases Unit Cost Purchases Total Cost Quantity Cost of Merchandise Sold Cost of Merchandise Sold Unit Cost Cost of Merchandise Sold Total Cost Inventory Quantity Inventory Unit Cost Inventory Total Cost Date Quantity Purchased Apr. 1 Apr. 10 Apr. 15 Apr. 24 Apr. 30 Apr. 30 Balances b. Based upon the preceding data, would you expect the inventory to be higher or lower using the last-in, first-out method? Perpetual Inventory Using LIFO Beginning inventory, purchases, and sales data for portable game players are as follows: Apr. 1 Inventory 10 Sale 36 units @ 541 24 units 46 units @ 543 26 units Purchase 20 24 30 Sale Sale Purchase 8 units 32 units @ 546 The business maintains a perpetual inventory system, costing by the last-in, first-out method. Determine the cost of merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 4. Under LIFO, if units are in inventory at two different costs, enter the units with the HIGHER unit cost first in the Cost of Merchandise Sold Unit Cost column and LOWER unit cost first in the Inventory Unit Cost column. Schedule of Cost of Merchandise Sold LIFO Method Portable Game Players Cost of Merchandise Sold Unit Cost Cost of Merchandise Sold Total Cost Inventory Quantity Purchases Unit Cost Purchases Total Cost Quantity Sold Inventory Unit Cost Inventory Total Cost Date Quantity Purchased Apr. 1 Apr. 10 Apr. 15 Apr. 24 Apr. 30 11 Apr. 30 Balance Weighted Average Cost Flow Method Under Perpetual Inventory System The following units of a particular item were available for sale during the calendar year: Jan. 1 Inventory 30,000 units at $30.00 Mar. 18 Sale 24,000 units May 2 54,000 units at $31.00 Purchase Sale Purchase Aug. 9 Oct. 20 45,000 units 21,000 units at $32.10 The firm uses the weighted average cost method with a perpetual inventory system. Determine the cost of merchandise sold for each sale and the inventory balance after each sale. Present the data in the form illustrated in Exhibit 5. Round unit cost to two decimal places, if necessary. Schedule of Cost of Merchandise Sold Weighted Average Cost Flow Method Cost of Merchandise Sold Quantity Unit Cost Total Cost Inventory Purchases Unit Cost Quantity Total Cost Quantity Unit Cost Total Cost Date Jan. 1 Mar. 18 May 2 Aug. 9 | oct. 20 Dec 31 Balances Periodic Inventory by Three Methods; Cost of Merchandise Sold The units of an item available for sale during the year were as follows: Jan. 1 Inventory Purchase Mar. 10 30 units @ $110 70 units @ $120 30 units @ $124 70 units @ $128 Aug. 30 Purchase Dec. 12 Purchase There are 80 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost and the cost of merchandise sold by three methods. Round interim calculations to one decimal and final answers to the nearest whole dollar. Cost of Merchandise Inventory and cost of Merchandise Sold Inventory Method Merchandise Inventory Merchandise Sold First-in, first-out (FIFO) SU Last-in, first-out (LIFO) Weighted average cost Effect of Errors in Physical Inventory Fonda Motorcycle Shop sells motorcycles, ATVs, and other related supplies and accessories. During the taking of its physical inventory on December 31, 2018, Fonda Motorcycle Shop incorrectly counted its inventory as $370,880 instead of the correct amount of s356,040. Enter all amounts as positive numbers. a. State the effect of the error on the December 31, 2018, balance sheet of Fonda Motorcycle Shop. Balance Sheet Items Overstated/Understated Amount Merchandise Inventory Current Assets Total Assets Owner's Equity b. State the effect of the error on the income statement of Fonda Motorcycle Shop for the year ended December 31, 2018 Income Statement Items Overstated/Understated Amount Cost of Merchandise Sold Gross Profit Net Income c. If uncorrected, what would be the effect of the error on the 2019 income statement? Income Statement Items Understated/Overstated Amount Cost of Merchandise Sold Gross Profit Net Income d. If uncorrected, what would be the effect of the error on the December 31, 2019, balance sheet? 1. The December 31, 2019, balance sheet would be correct, since the 2018 inventory error reverses itself in 2019. 2. The December 31, 2019, balance sheet would be incorrect, since the 2018 inventory error understates the inventory in 2019. 3. The December 31, 2019, balance sheet would be incorrect, since the 2018 inventory error overstates the inventory in 2019