SACM VACM American College of the Middle East TAP4 Assignment 15% - Version 2 ACT340 Intermediate Accounting - Chapter 8 Exercise 1 (15 points) Part 1 Multiple Choice Questions - Choose one right answer (10 points, 5 points each) 1. Lawson Manufacturing Company has the following account balances at year end: Supplies 4,000 Raw materials 27,000 Work-in-process 59,000 Finished goods 92,000 Prepaid insurance 6,000 What amount should Lawson report as inventories in its statement of financial position? a. 92,000. b. 96,000. c. 178,000 d. 182,000. 2. Which of the following costs should not be included on the statement of financial position as part of the cost of inventory? a. Abnormal freight b. Import duties and taxes. c. Conversion costs. d. All of the choices are included on the statement of financial position as part of the cost of inventory. Part 2 - True or False (5 points) 3. Is the statement True or False? "Companies must allocate the cost of all the goods available for sale (or use) between the income statement and the statement of financial position." Exercise 2 (50 points) Jakarta Ltd. uses a periodic inventory system. For June, when the company sold 600 units, the following information is available: June 1 inventory June 15 purchase June 23 purchase Units 150 600 400 1,150 Unit cost $ 5 6 8 Instruction: Compute the June 30 inventory and the June cost of goods sold using a) the average-cost method (30 points) b) FIFO method (20 points) Exercise 3 (35 points) 1. In what ways are the inventory accounts of the merchandising company different from those of a manufacturing company? (11 points) 2. Define period costs" as they relate to inventory. (11 points) 3. Define perpetual system of maintaining inventory records. (13 points) Purchase returns Bonus question (10 points) The following information is available for SAAB Company for 2019: Freight-in 35,000 85,000 Selling expenses 150,000 Ending inventory 260,000 The cost of goods sold is equal to 400% of selling expenses. Instruction: What is the cost of goods available for sale