MASTERING INVENTORY HOMEWORK EXERCISES

Section 1INTRODUCTION TO ACCOUNTING FOR INVENTORY

1. Your calendar year company places the following orders on December 27. Indicate which of the orders will be reflected on this years financial statements.

a. Goods shipped December 28, FOB shipping point and received January 2.

b. Goods shipped December 27, FOB destination and received January 4.

Section 2INVENTORY RECORDKEEPING USING THE PERPETUAL METHOD

1. On July 13, Ainsley Co. orders inventory with an invoice price of $20,000, FOB destination. On July 17, the goods and invoice are received. On July 21, Ainsley pays the invoice in full. On July 30, the inventory is sold on account for $30,000. Prepare the journal entries to record each transaction under the perpetual method.

Section 3INVENTORY RECORDKEEPING USING THE PERIODIC METHOD

1. On April 10, MDC orders inventory with an invoice price of $18,000, FOB destination. MDC receives the goods and invoice on April 13 and pays the invoice in full on April 20. On April 30, the inventory is sold for $25,000 cash. Prepare the journal entries to record each transaction under the periodic method.

Section 4INVENTORY COSTING THE WEIGHTED-AVG. AND MOVING-AVG. METHODS

1. FlipCo, which uses the periodic method and weighted average costing, begins operations in 20X8. On January 15, FlipCo purchases 20 units at $6 each; on March 21, 30 units at $7.00 each, on June 1, 450 units at $5.25 each, and on November 12, 50 units at $6.25 each.

a. What is FlipCos cost per unit?

b. If ending inventory is 125 units, what is FlipCos 20X8 ending inventory and COGS?