Assessment 3 Instructions: Plant Assets and Receivables Aging

The following independent situations relate to inventory accounting. Use the Assessment 3 Template to record you answers to each of the questions about inventories and to explain your answers. Where appropriate, show all calculations leading to the final solution.

Problem 1

Northern Co. was able to purchase goods at a list price of $330,000. This purchase came with trades discounts of 15% and 10%; no cash discounts were allowed. What will Northern Co. record as the cost of inventory for these items?

Problem 2

The inventory for Jason’s company was $605,000 as of December 31, 2018, based on a physical inventory count, all goods are priced at cost, and no year-end adjustments have been made for the following goods:

a. Jason’s company received goods on January 4, 2019, with an invoice cost of $37,950. The goods were shipped f.o.b. on December 24, 2018.

b. Suptic Corp was billed for $15,950 of goods f.o.b. shipping point on December 31, 2018. The goods were not picked up by the carrier until January 4, 2019, so they were included in the physical inventory.

What amount will be reported as inventory on the balance sheet?

Problem 3

Federal Corp. had 825 units of part B467 on hand May 1, 2018, costing $10.00 each. Purchases of part B467 during May were as follows.

Units Unit Cost

May 9 1,100 $10.50

17 1,925 11.00

26 550 11.50

A physical count on May 31, 2018, shows 1,155 units of part B467 on hand. Using the FIFO method, what is the cost of part B467 inventory at May 31, 2018?

Using the LIFO method, what is the inventory cost?

Using the average-cost method, what is the inventory cost?

Problem 4

Frederick Company adopted the dollar-value LIFO method on January 1, 2017 (using internal price indexes and multiple pools). The following data are available for inventory pool A for the 2 years following adoption of LIFO.

At Base- At Current- Price

Inventory Year Cost Year Cost Index

1/1/17 $110,000 $110,000 100

12/31/17 132,000 138,600 105

12/31/18 140,800 157,696 112

Using the dollar-value LIFO method, at what amount should the inventory be reported at December 31, 2018?

Problem 5

Ramsey, Inc., a retail store chain, had the following information in its general ledger for the year 2018.

Merchandise purchased for resale $500,170

Interest on notes payable to vendors 4,785

Purchase returns 9,075

Freight-in 12,100

Freight-out 9,405

What is Ramsey’s inventoriable cost for 2018?