Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

PLEASE HELP!!!!! Inventory Records Widget Tek Inc.s original accountant accepted a position with another firm and left in early March. You have been asked to

PLEASE HELP!!!!!
Inventory Records
Widget Tek Inc.s original accountant accepted a position with another firm and left in early March. You have been asked to review the subsidiary inventory ledger record for Widget Tek Inc.s main product for March.
Inventory
Date Quantity Unit Cost Total Cost
Mar. 1 850 $98 $83,300
1,275 $95 $121,125
Mar. 8 650 $98 $63,700
Mar. 11 325 $98 $31,850
Mar. 14 325 $98 $31,850
780 $103 $80,340
Mar. 22 260 $98 $25,480
Mar. 25 260 $98 $25,480
1,800 $102 $183,600
Study the inventory record for March and answer the questions that follow.
1. Assuming that the product sells for $165 and that 70% of sales are on account, determine the gross profit from sales for March. $ _________.
2. Making the same assumptions as in (1), determine the ending inventory cost for March. $_________.
3. Which inventory method is being used? _________.
Final Questions
In conversation with the president of Widget Tek Inc., you have learned that much of the companys inventory consists of older Widget Tek Inc. models. These older models sell for less than the newer Widget Tek Inc. models, but customers strongly prefer the newer models. The company believes that the net realizable value of the older inventory is less than its value in the subsidiary inventory ledger.
Considering all of the information you have about Widget Tek Inc., answer the following questions.
1. To better account for the older inventory, the president of Widget Tek Inc. wonders whether the inventory should be valued using a different method. Do you agree, and why or why not?
_________ because __________ will __________.
2. Will a change in inventory method increase a companys net income on its financial statements?
__________.
3. When is inventory not valued at cost?
_________.
Mastery Problem: Inventories
Changing Prices
You work for a CPA firm that has been hired by Widget Tek Inc., a merchandising company that is getting ready to expand. The president of Widget Tek Inc. is concerned with obtaining a loan for the expansion and wants to be sure that all the financial statements accurately reflect the companys accounting records.
As preparation for this assignment, you have been asked to review the effects of changing prices on three inventory costing methods: LIFO, FIFO, and weighted average.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Internal Auditor At Work A Practical Guide To Everyday Challenges

Authors: K. H. Spencer Pickett

1st Edition

0471458392, 978-0471458395

More Books

Students also viewed these Accounting questions