The following independent situations relate to inventory accounting 1 Draper Co
The following independent situations relate to inventory accounting:
1. Draper Co. purchased goods with a list price of $175,000 and a trade discount of 20% based on the quantity purchased, with terms 2/10, net 30.
2. Assayer Company's inventoryof $1.1 million at December 31, 2014, was based on a physical count of goods priced at cost and before any year-end adjustments relating to the following items.
(a) Goods shipped FOB shipping point on December 24, 2014, from a vendor at an invoice cost of $69,000 to Assayer Company were received on January 4, 2015.
(b) The physical count included $29,000 of goods billed to Makee Corp., FOB shipping point, on December 31, 2014. The carrier picked up these goods on January 3, 2015.
(c) Goods shipped FOB destination received by Assayer on January 5, 2015. The invoiced amount was $77,000.
(d) Goods shipped FOB destination received by Assayer on December 25, 2014, that are on consignment. The value of the goods is $83,500 and they have not been included in the physical inventory count.
3. Alidade Corp. had 1,500 units on hand of part 54169 on May 1, 2014, with acost of $21 per unit. Alidade uses a periodic inventory system. Purchases of part 54169 during May were as follows:
A physical count on May 31,2014, shows 2, units of part 54169 on hand.
4. Galane Ltd., a retail store chain, had the following information in its general ledger for the year 2014:
Answer the following questions for the situations above and explain your answer in each case:
(a) For situation 1, how much should Draper Co. record as the purchase cost of these goods on the date of purchase assuming the company uses
(i) the gross method and
(ii) the net method?
(b) For situation 2, what should Assayer Company report as its inventory amount on its 2014 balance sheet?
(c) For situation 3, using the FIFO method, what is the inventory cost of part 54169 at May 31, 2014? Using the weighted average cost formula, what is the inventory cost?
(d) For situation 4, assume that Galane Ltd. is a private company reporting under ASPE. What is Galane’s; inventoriable cost for 2014? Explain any items that are excluded.
(e) How would your answer to part (d) differ if Galane used IFRS? Which of these standards provides the most useful information to users: ASPE or IFRS? Why?
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