ACCT 302 and 410 HW

John's Specialty Store uses a perpetual inventory system. The following are some inventory transactions for the month of May 2013:

1. 

John’s purchased merchandise on account for $6,100. Freight charges of $850 were paid in cash.

2. 

John’s returned some of the merchandise purchased in (1). The cost of the merchandise was $1,150 and John’s account was credited by the supplier.

3. 

Merchandise costing $3,350 was sold for $6,300 in cash.

Required:

Prepare the necessary journal entries to record these transactions. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

The Kwok Company's inventory balance on December 31, 2013, was $205,000 (based on a 12/31/13 physical count) before considering the following transactions:

1. 

Goods shipped to Kwok f.o.b. destination on December 20, 2013, were received on January 4, 2014. The invoice cost was $38,000.

2. 

Goods shipped to Kwok f.o.b. shipping point on December 28, 2013, were received on January 5, 2014. The invoice cost was $25,000.

3. 

Goods shipped from Kwok to a customer f.o.b. destination on December 27, 2013, were received by the customer on January 3, 2014. The sales price was $48,000 and the merchandise cost $30,000.

4. 

Goods shipped from Kwok to a customer f.o.b. destination on December 26, 2013, were received by the customer on December 30, 2013. The sales price was $28,000 and the merchandise cost $21,000.

5. 

Goods shipped from Kwok to a customer f.o.b. shipping point on December 28, 2013, were received by the customer on January 4, 2014. The sales price was $33,000 and the merchandise cost $20,000.

Required:

Determine the correct inventory amount to be reported in Kwok's 2013 balance sheet.

Causwell Company began 2013 with 13,000 units of inventory on hand. The cost of each unit was $6. During 2013 an additional 30,000 units were purchased at a single unit cost, and 23,000 units remained on hand at the end of 2013 (20,000 units therefore were sold during 2013). Causwell uses a periodic inventory system. Cost of goods sold for 2013, applying the average cost method, is $150,000. The company is interested in determining what cost of goods sold would have been if the FIFO or LIFO methods were used.

Required:

1.

Determine the cost of goods sold for 2013 using the FIFO method. [Hint: Determine the cost per unit of 2013 purchases.]

Steelcase Inc. is the global leader in providing furniture for office environments. The company uses the LIFO inventory method for external reporting and for income tax purposes but maintains its internal records using FIFO. The following disclosure note was included in a recent annual report:

7. Inventories ($ in millions):

February 25, 2011

February 26, 2010

  Raw materials

$

62

$

49.3

  Work-in-process

14.6

12.6

  Finished goods

82.6

65.5

159.2

127.4

  LIFO reserve

(21.6

)

(22.7

)

$

137.6

$

104.7

The company's income statement reported cost of goods sold of $1,732.3 million for the fiscal year ended February 25, 2011.

Required:

1.

Steelcase adjusts the LIFO reserve at the end of its fiscal year. Prepare the February 25, 2011, adjusting entry to make the cost of goods sold adjustment. (Enter your answers in millions, (i.e., 5,500,000 should be entered as 5.5). Round your answers to 1 decimal place. If no entry is required for a transaction, select "No journal entry required" in the first account field.)

Reagan Corporation is a wholesale distributor of truck replacement parts. Initial amounts taken from Reagan's records are as follows:

  Inventory at December 31 (based on a physical count

    of goods in Reagan's warehouse on December 31)

$

1,430,000

  Accounts payable at December 31:

  Vendor

Terms

Amount

  Baker Company

2%, 10 days, net 30

$

301,000

  Charlie Company

Net 30

246,000

  Dolly Company

Net 30

336,000

  Eagler Company

Net 30

261,000

  Full Company

Net 30

—

  Greg Company

Net 30

—

  Accounts payable, December 31

$

1,144,000

  Sales for the year

$

9,900,000

Additional Information:

 1. 

Parts held by Reagan on consignment from Charlie, amounting to $245,000, were included in the physical count of goods in Reagan's warehouse and in accounts payable at December 31.

 2. 

Parts totaling $40,000, which were purchased from Full and paid for in December, were sold in the last week of the year and appropriately recorded as sales of $46,000. The parts were included in the physical count of goods in Reagan's warehouse on December 31 because the parts were on the loading dock waiting to be picked up by customers.

 3. 

Parts in transit on December 31 to customers, shipped f.o.b. shipping point on December 28, amounted to $70,000. The customers received the parts on January 6 of the following year. Sales of $76,000 to the customers for the parts were recorded by Reagan on January 2.

 4. 

Retailers were holding goods on consignment from Reagan, which had a cost of $390,000 and a retail value of $430,000.

 5. 

Goods were in transit from Greg to Reagan on December 31. The cost of the goods was $43,000, and they were shipped f.o.b. shipping point on December 29.

 6. 

A freight bill in the amount of $3,800 specifically relating to merchandise purchased in December, all of which was still in the inventory at December 31, was received on January 3. The freight bill was not included in either the inventory or in accounts payable at December 31.

 7. 

All the purchases from Baker occurred during the last seven days of the year. These items have been recorded in accounts payable and accounted for in the physical inventory at cost before discount. Reagan's policy is to pay invoices in time to take advantage of all discounts, adjust inventory accordingly, and record accounts payable net of discounts.

Required:

Complete the schedule of adjustments to the initial amounts which is shown below. (Amounts to be deducted should be indicated by a minus sign.)