8 Valuation of Inventories: A Cost-Basis Approach BRIEF EXERCISES 8
BRIEF EXERCISES
BE8-1 (L01) Included in the December 31 trial balance of Rivera Company are the following assets.
Cash $ 190,000 Work in process $200,000
Equipment (net) 1,100,000 Accounts receivable (net) 400,000
Prepaid insurance 41,000 Patents 110,000
Raw materials 335,000 Finished goods 170,000
Prepare the current assets section of the December 31 balance sheet.
BE8-2 (L01) Matlock Company uses a perpetual inventory system. Its beginning inventory consists of 50 units that cost $34 each. During June, the company purchased 150 units at $34 each, returned 6 units for credit, and sold 125 units at $50 each.
Journalize the June transactions.
BE8-3 (L02) Stallman Company took a physical inventory on December 31 and determined that goods costing $200,000 were on hand. Not included in the physical count were $25,000 of goods purchased from Pelzer Corporation, f.o.b. shipping point, and $22,000 of goods sold to Alvarez Company for $30,000, f.o.b. destination. Both the Pelzer purchase and the Alvarez sale were in transit at year-end. What amount should Stallman report as its December 31 inventory?
BE8-4 (L03) Amsterdam Company uses a periodic inventory system. For April, when the company sold 600 units, the following information is available.
Units Unit Cost Total Cost
April 1 inventory 250 $10 $ 2,500
April 15 purchase 400 12 4,800
April 23 purchase 350 13 4,550
1,000 $11,850
Compute the April 30 inventory and the April cost of goods sold using the average-cost method.
BE8-5 (L03) Data for Amsterdam Company are presented in BE8-4. Compute the April 30 inventory and the April cost of goods sold using the FIFO method.
BE8-6 (L03) Data for Amsterdam Company are presented in BE8-4. Compute the April 30 inventory and the April cost of goods sold using the LIFO method.
BE8-7 (L04) Trout Company uses the LIFO method for financial reporting purposes but FIFO for internal reporting purposes.
At January 1, 2017, the LIFO reserve has a credit balance of $1,300,000. At December 31, 2017, Trout’s internal reports indicated that the FIFO inventory balance was $2,900,000 and for external reporting purposes the LIFO inventory balance was $1,500,000.
What is the amount of the LIFO reserve and the LIFO effect related to 2017? What is the journal entry needed to record the LIFO effect at December 31, 2017?
BE8-8 (L04) Midori Company had ending inventory at end-of-year prices of $100,000 at December 31, 2016; $119,900 at December 31, 2017; and $134,560 at December 31, 2018. The year-end price indexes were 100 at 12/31/16, 110 at 12/31/17, and 116 at 12/31/18. Compute the ending inventory for Midori Company for 2016 through 2018 using the dollar-value LIFO method.
BE8-9 (L04) Arna, Inc. uses the dollar-value LIFO method of computing its inventory. Data for the past 3 years follow.
Year Ended December 31 Inventory at Current-Year Cost Price Index
2016 $19,750 100
2017 22,140 108
2018 25,935 114
Compute the value of the 2017 and 2018 inventories using the dollar-value LIFO method.
BE8-10 (L05) Bienvenu Enterprises reported cost of goods sold for 2017 of $1,400,000 and retained earnings of $5,200,000 at December 31, 2017. Bienvenu later discovered that its ending inventories at December 31, 2016 and 2017, were overstated by $110,000 and $35,000, respectively. Determine the corrected amounts for 2017 cost of goods sold and December 31, 2017, retained earnings.
