Please help I am having problems with my assignment.
1. Shepherd Cycles used the FIFO inventory method in 2010. Shepherd Cycles plans to continue using the FIFO method in future years. Requirement R1. Which inventory principle is most relevant to Shepherd's decision? 2. Shepherd Cycles does not expect prices to change dramatically and wants to use a method that averages price changes. Requirements R1. Which inventory method would best meet Shepherd's goal? R2. What if Shepherd wanted to expense out the newer purchases of goods instead? Which inventory would best meet that need? 3. Innovation Cycles uses the FIFO inventory method. Innovation started March with 10 bicycles that cost $60 each. On March 16, Innovation bought 20 bicycles at $70 each. On March 31, Innovation sold 25 bicycles. Requirement R1. Prepare Innovation's perpetual inventory record. 4. Review the facts on Innovation Cycles in problem #3. Requirement R1. Prepare a perpetual inventory record for the LIFO method. 5. Review the facts on Innovation Cycles in problem #3. Requirement R1. Prepare a perpetual inventory record for the average-cost method. Round average cost per unit to the nearest cent and all other amounts to the nearest dollar. 6. Use the Innovation Cycles data in problem #3 to journalize. Requirements R1. The March 16 purchase of inventory on account. R2. The March 31 sale of inventory on account. Innovation sold each bicycle for $120. R3. Cost of goods sold under FIFO on March 31. 7. Use the Innovation Cycles data in problem #4 to journalize. Requirements R1. The March 16 purchase of inventory on account. 1 R2. The March 31 sale of inventory on account. Innovation sold each bicycle for $120. R3. The Cost of goods sold under LIFO on March 31. 8. Use the Innovation Cycles data in problem #5 to journalize. Requirements R1. The March 16 purchase of inventory on account. R2. The March 31 sale of inventory on account. Innovation sold each bicycle for $120. R3. The Cost of goods sold under average cost on March 31. 9. Refer to problems #3 through #8. After completing those exercises, answer the following questions: Requirements R1. Which method of inventory accounting produced the lowest cost of goods sold? R2. Which method of inventory accounting produced the highest cost of goods sold? R3. If prices had been declining instead of rising, which inventory method would have produced the highest cost of goods sold? 10. Assume that a Queen Burger restaurant has the following perpetual inventory record for hamburger patties: Requirements R1. At April 30, the accountant for the restaurant determines that the current replacement cost of the ending inventory is $515. Make any adjusting entry needed to apply the lower-of-costormarket rule. Inventory would be reported on the balance sheet at what value on April 30? R2. Inventory would be reported on the balance sheet at what value if Queen uses the averagecost method? 11. Boston Cycles' inventory data for the year ended December 31, 2011, follow: 2 Assume that the ending inventory was accidentally overstated by $2,200. Requirement R1. What are the correct amounts for cost of goods sold and gross profit? 12. Refer back to the Boston Cycles' inventory data in problem #11. Requirement R1. How would the inventory error affect Boston Cycles' cost of goods sold and gross profit for the year ended December 31, 2012, if the error is not corrected in 2011? 13. Electronic Company began the year with inventory of $55,800 and purchased $277,000 of goods during the year. Sales for the year are $476,000, and Electronic's gross profit percentage is 45% of sales. Requirement R1. Compute the estimated cost of ending inventory by the gross profit method. 14. Fancy Iron Industries began October with 54 units of iron inventory that cost $39 each. During October, the company completed the following inventory transactions: Requirements R1. Prepare a perpetual inventory record for the inventory using FIFO. R2. Prepare a perpetual inventory record for the inventory using LIFO. R3. Prepare a perpetual inventory record for the inventory using average cost. R4. Determine the company's cost of goods sold for October using FIFO, LIFO, and average cost. 3 R5. Compute gross profit for October using FIFO, LIFO, and average cost. 15. Antique Carpets' books show the following data (in thousands). In early 2013, auditors found that the ending inventory for 2010 was understated by $8 thousand and that the ending inventory for 2012 was overstated by $9 thousand. The ending inventory at December 31, 2011, was correct. Requirements R1. Prepare corrected income statements for the three years. R2. State whether each year's net incomebefore your correctionsis understated or overstated and indicate the amount of the understatement or overstatement. 16. Gala Costumes estimates its inventory by the gross profit method. The gross profit has averaged 28% of net sales. The company's inventory records reveal the following data (amounts in thousands): Requirements R1. Estimate the December 31 inventory, using the gross profit method. R2. Prepare the December income statement through gross profit for Gala Costumes. 17. A Futuristic Electronic Center began December with 91 units of inventory that cost $73 each. During December, the store made the following purchases: 4 Futuristic uses the periodic inventory system, and the physical count at December 31 indicates that 115 units of inventory are on hand. Requirements R1. Determine the ending inventory and cost-of-goods-sold amounts for the December financial statements under the average cost, FIFO, and LIFO methods. R2. Sales revenue for December totaled $24,000. Compute Futuristic's gross profit for December under each method. R3. Which method will result in the lowest income taxes for Futuristic? Why? Which method will result in the highest net income for Futuristic? Why? 5
