Week 7 Credit Terms Discussion Board is 15 You werejust hired as the assistant to the Chief Financial Ofcer (CFO) of Saddleback Specialty Shops, an exclusive specialty chain store company that has thirty retail stores concentrated in Southern California. Among other things. the payment of all invoices is centralized in one department that you will be managing. Your primary responsibility is to maintain the company's high credit rating by paying all bills when they are due and taking advantage of all cash discounts. Janie Saddleback. the former assistant to the CFO. who has been promoted to CFO, is training you in your new duties. She instructs you that you are to continue the practice of preparing all checks "net of discount and date them the last day of the discount period.\" \"BUT" Janie continues. "we always hold the checks at least four days beyond the discount period before mailing them. That way we get another four days of interest on our money. Most of our creditors need our business and don't complain. And if they scream about our missing the discount period. we blame it on the mailroom or the post office. We have only lost one discount out of every hundred we have taken using this strategy. i think everybody does it. By the way, welcome to our team!" Share with your classmates answers to the following questions: 1. What ethical considerations exist in this scenario? 2. What stakeholders are harmed or beneted? 3. Should you continue the practice started by Janie Saddleback? Do you have any choice? Exercise 5-2 (Static) Inventory costs LO C1 2 Walberg Associates, antique dealers, purchased goods for $75,000. Terms of the purchase were FOB shipping point, and the cost of points transporting the goods to Walberg Associates's warehouse was $2,400. Walberg Associates insured the shipment at a cost of $300. Prior to putting the goods up for sale, they cleaned and refurbished them at a cost of $980. eBook Determine the cost of inventory. Hint Cost of inventory Print References Total cost of inventory2 Required information Use the following information for the Exercises 3-7 below. (Static) [The following information applies to the questions displayed below.] Part 1 of 2 Laker Company reported the following January purchases and sales data for its only product. The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 180 units from the January 30 2 purchase, 5 units from the January 20 purchase, and 15 units from beginning inventory. points Date Activities Units Acquired at Cost Units sold at Retail January 1 Beginning inventory 140 units @ $ 6.00 = $ 840 January 10 Sales 100 units @ $ 15 eBook January 20 Purchase 60 units @ $ 5.00 = 300 January 25 Sales 80 units @ $ 15 Hint January 30 Purchase 180 units a $ 4.50 = 810 380 units Print Totals $ 1,950 180 units References Exercise 5-3 (Static) Perpetual: Inventory costing methods LO P1 Required: 1. Complete the table to determine the cost assigned to ending inventory and cost of goods sold using specific identification. 2. Determine the cost assigned to ending inventory and to cost of goods sold using weighted average. 3. Determine the cost assigned to ending inventory and to cost of goods sold using FIFO. 4. Determine the cost assigned to ending inventory and to cost of goods sold using LIFO.2 Fire Required information Complete this question by entering your answers in the tabs below. Part 1 of 2 Specific Id Weighted FIFO LIFO Average 2 points Determine the cost assigned to ending inventory and to cost of goods sold using weighted average. (Round cost per unit to 2 decimal places.) Weighted Average - Perpetual: eBook Goods Purchased Cost of Goods Sold Inventory Balance Hint Date # of # of units Cost per Cost per Cost of Goods units # of units Cost per Inventory Print unit unit Sold unit Balance sold References January 1 140 at $ 6.00 = $ 840.00 January 10 100 at $ 6.00 = $ 600.00 40 at $ 6.00 = $ 240.00 60 at $ 5.00 40 at $ 6.00 = $ 240.00 January 20 60 at $ 5.00 = 300.00 Average cost January 20 100 at $ 5.40 $ 540.00 January 25 80 at $ 5.40 = $ 432.00 20 at $ 5.40 = $ 108.00 180 at $ 4.50 20 at $ 5.40 = $ 108.00 January 30 180 $ 4.50 810.00 Totals $ 1,032.00 200 at $ 918.00 2 Required information Goods Purchased Cost of Goods Sold Inventory Balance Date Part 1 of 2 # of units Cost per # of units Cost per Cost of Goods unit sold unit Sold # of units Cost per Inventory unit Balance January 1 140 at $ 6.00 $ 840.00 2 January 10 100 at $ 6.00 $ 600.00 40 at $ 6.00 = $ 240.00 points 60 at $ 5.00 40 at $ 6.00 $ 240.00 January 20 eBook 60 at $ 5.00 E 300.00 Hint Total January 20 $ 540.00 Print 40 at $ 6.00 = $ 240.0 $ 6.00 References January 25 40 at $ 5.00 = 200.00 20 at $ 5.00 = $ 100.00 Total January 25 $ 440.00 $ 100.00 180 at $ 4.50 at $ 6.00 January 30 20 at $ 5.00 = 100.00 at $ 4.50 Totals $ 1,040.00 $ 100.00 2 Required information Average AITI LIIV Part 1 of 2 Determine the cost assigned to ending inventory and to cost of goods sold using LIFO. Perpetual LIFO: 2 Goods Purchased Cost of Goods Sold Inventory Balance Date points # of units Cost per # of units Cost per | Cost of Goods Sold # of units Cost per Inventory unit sold unit unit Balance January 1 140 at $ 6.00 = $ 840.00 eBook January 10 100 at $ 6.00 $ 600.00 40 at $ 6.00 = $ 240.00 Hint Print 60 at $ 5.00 40 at $ 6.00 = $ 240.00 January 20 References 60 at $ 5.00 = 300.00 Total January 20 $ 540.00 20 at $ 6.00 $ 120.00 20 at $ 6.00 = $ 120.00 January 25 60 at $ 5.00 = 300./0 $ 5.00 = Total January 25 $ 420.00 $ 120.00 180 at $ 4.50 20 at $ 6.00 = $ 120.00 January 30 at $ 5.00 at $ 4.50 Totals $ 1,020.00 $ 120.003 Required information Part 2 of 2 Use the following information for the Exercises 3-7 below. (Static) [The following information applies to the questions displayed below.] 2 Laker Company reported the following January purchases and sales data for its only product. The Company uses a points perpetual inventory system. For specific identification, ending inventory consists of 180 units from the January 30 purchase, 5 units from the January 20 purchase, and 15 units from beginning inventory. eBook Date Activities Units Acquired at Cost Units sold at Retail @ $ 6.00 = Hint January 1 Beginning inventory 140 units $ 840 January 10 Sales 100 units @ $ 15 January 20 Purchase 60 units $ 5.00 = 300 Print January 25 Sales 80 units @ $ 15 January 30 Purchase 180 units a $ 4.50 = 810 References Totals 380 units $ 1, 950 180 units Exercise 5-5 (Static) Perpetual: Gross profit effects of inventory methods LO A1 1. Compute gross profit for the month of January for Laker Company for the four inventory methods. 2. Which method yields the highest gross profit? 3. Does gross profit using weighted average fall between that using FIFO and LIFO? 4. If costs were rising instead of falling, which method would yield the highest gross profit?Complete this question by entering your answers in the tabs below. Reql Req2to4 Compute gross profit for the month of January for Laker Company for the four inventory methods. (Round cost per unit to 2 decimal places and final answers to the nearest whole dollars.) Cost of goods sold Gross prot 33 0 $ 0 $ 0 $ 0 Complete this question by entering your answers in the tabs below. Reql Req2to4 8. 2. Which method yields the highest gross profit? 3. Does gross profit using weighted average fall between that using FIFO and LIFO? 4. If costs were rising instead of falling, which method would yield the highest gross profit? 2. Which method yields the highest gross prot\"?r 'i 3. Does gross prot using weighted average fall between that using FIFO and LIFO? 4. If costs were rising instead of falling, which method would yield the highest gross profit? 4 Exercise 5-16 (Static) Lower of cost or market LO P2 2 Martinez Company's ending inventory includes the following items. points Market per Product Units Cost per Unit Unit 24 eBook Helmets $ 50 $ 54 Bats 17 78 72 Hint Shoes 38 95 91 Uniforms 42 36 36 Print Compute the lower of cost or market for ending inventory applied separately to each product. References Per Unit Total Inventory Items Units LCM Applied Cost Market Cost Market to Items Helmets 24 $ 50 $ 54 Bats 17 78 72 Shoes 38 95 91 Uniforms 42 36 36 $ O S 0 $ 08 ! Required information Part 3 of 4 Problem 5-1A (Static) Perpetual: Alternative cost flows LO P1 [The following information applies to the questions displayed below.] 1.25 Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions points for March. Date Activities Units Acquired at Cost Units Sold at Retail eBook March 1 Beginning inventory 100 units @ $50 per unit March 5 Purchase 400 units @ $55 per unit Print March 9 Sales 420 units @ $85 per unit March 18 Purchase 120 units @ $60 per unit References March 25 Purchase 200 units @ $62 per unit March 29 Sales 160 units @ $95 per unit Totals 820 units 580 units Problem 5-1A (Static) Part 3 3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification, units sold include 80 units from beginning inventory, 340 units from the March 5 purchase, 40 units from the March 18 purchase, and 120 units from the March 25 purchase.8 in Required information Part 3 of 4 Complete this question by entering your answers in the tabs below. 1.25 Perpetual FIFO Perpetual LIFO Weighted Specific Id Average points Compute the cost assigned to ending inventory using specific identification. For specific identification, units sold include 80 units from beginnin 5 purchase, 40 units from the March 18 purchase, and 120 units from the March 25 purchase. eBook Print Specific Identification: References Goods Purchased Cost of Goods Sold Inventory Balance Date Cost per Goods # of units # of units Cost per Cost per unit Puchased unit Cost of Goods Sold sold # of units unit Inventory Balance March 1 100 at $ 50.00 = $ 5,000 100 at $ 50.00 = $ 5,000.00 at $ 50.00 = $ 0.00 March 5 400 at $ 55.00 = 22,000 at $ 55.00 at $ 55.00 March 18 120 at $ 60.00 7,200 at $ 60.00 E 0.00 at $ 60.00 E 0.00 March 25 200 at $ 62.00 = $ 12,400 at $ 62.00 at $ 62.00 Totals $ 5,000.00 $ 0.00 9 Required information Problem 5-1A (Static) Perpetual: Alternative cost flows LO P1 [The following information applies to the questions displayed below.] Part 4 of 4 Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March. 1.25 Date Activities Units Acquired at Cost Units Sold at Retail points March 1 Beginning inventory 100 units @ $50 per unit March 5 Purchase 400 units @ $55 per unit March 9 Sales 420 units @ $85 per unit eBook March 18 Purchase 120 units @ $60 per unit March 25 Purchase 200 units @ $62 per unit Print March 29 Sales 160 units @ $95 per unit Totals 820 units 580 units References Problem 5-1A (Static) Part 4 4. Compute gross profit earned by the company for each of the four costing methods. For specific identification, units sold include 80 units from beginning inventory, 340 units from the March 5 purchase, 40 units from the March 18 purchase, and 120 units from the March 25 purchase. (Round weighted average cost per unit to 2 decimal places.) Gross Margin FIFO LIFO Weighted Average Specific ID Sales Less: Cost of goods sold Gross profit