Question

1. Headlands Industries uses a periodic inventory system. Its records show the following for the month of May, in which 77 units were sold.

Date		Explanation		Units		Unit Cost		Total Cost
May 1		Inventory		31		$10		$310
15		Purchase		23		11		253
24		Purchase		37		13		481
		Total		91				$1,044

Calculate the ending inventory at May 31 using the FIFO, LIFO and average-cost methods. (Round average unit cost to 2 decimal places, e.g. 2.51 and final answers to 0 decimal places, e.g. 125.)

		FIFO		LIFO		AVERAGE-COST
Ending inventory at May 31		$enter ending inventory at May 31 under First In First Out in dollars		$enter ending inventory at May 31 under Last In First Out in dollars		$enter ending inventory at May 31 under average cost in dollars

2. Windsor Bank and Trust is considering giving Pohl Company a loan. Before doing so, it decides that further discussions with Pohl’s accountant may be desirable. One area of particular concern is the Inventory account, which has a year-end balance of $335,500. Discussions with the accountant reveal the following.

1.		Pohl shipped goods costing $67,100 to Hemlock Company FOB shipping point on December 28. The goods are not expected to reach Hemlock until January 12. The goods were not included in the physical inventory because they were not in the warehouse.
2.		The physical count of the inventory did not include goods costing $95,000 that were shipped to Pohl FOB destination on December 27 and were still in transit at year-end.
3.		Pohl received goods costing $30,500 on January 2. The goods were shipped FOB shipping point on December 26 by Yanice Co. The goods were not included in the physical count.
4.		Pohl shipped goods costing $62,220 to Ehler of Canada FOB destination on December 30. The goods were received in Canada on January 8. They were not included in Pohl’s physical inventory.
5.		Pohl received goods costing $51,240 on January 2 that were shipped FOB destination on December 29. The shipment was a rush order that was supposed to arrive December 31. This purchase was included in the ending inventory of $275,000.

Determine the correct inventory amount on December 31.

Correct inventory on December 31

$enter the correct inventory amount on December 31 in dollars

3. In its first month of operation, Sage Hill Company purchased 110 units of inventory for $6, then 220 units for $7, and finally 142 units for $8. At the end of the month, 204 units remained. The company uses the periodic method.

Compute the amount of phantom profit that would result if the company used FIFO rather than LIFO.

Phantom profit

$enter Phantom profit in dollars

4. Wildhorse Company took a physical inventory on December 31 and determined that goods costing $244,000 were on hand. Not included in the physical count were $30,500 of goods purchased from Pelzer Corporation, FOB, shipping point, and $26,840 of goods sold to Alvarez Company for $36,600, FOB destination. Both the Pelzer purchase and the Alvarez sale were in transit at year-end.

What amount should Wildhorse report as its December 31 inventory?

Ending inventory

$enter the Ending inventory in dollars

Answer 1

Solutions:

FIFO LIFO 182.00 $ 140.00 $ Avg Cost 161 Ending Inventory $

Workings:

FIFO Cost of Goods Sold Flow of Units Cost Units Price 31 23 10 $ 310.00 11 $ 253.00 13 $ 299.00 $ 862.00 23 77 91 77 Ending Inventory Units Available Units Sold Ending Inventory Cost of Ending Inventory FIFO ( 14@13) or (1044-862) 14 $ 182.00

LIFO Cost of Goods Sold Flow of Units Units Price 37 23 Cost 13 $ 481.00 11 $ 253.00 10 $ 170.00 $ 904.00 17 77 91 77 Ending Inventory Units Available Units Sold Ending Inventory Cost of Ending Inventory LIFO ( 14@10) or (1044-904) 14 $ 140.00

11.47 Average Cost Average Cost per unit (1044/91) Cost of Ending Inventory Average Cost (14*11.47) $ 161

PS: Dear student, please keep one question per post. One is done for you. Hope this helps. For any clarifications kindly use the comment box