ABC Company’s budgeted sales for June, July, and August are 12,000, 16,000, and 14,000 units, respectively. ABC requires 30% of the next month’s budgeted unit sales as finished goods inventory each month. Budgeted ending finished goods inventory for May is 3,600 units.

Required: Calculate the number of units to be produced in June and July.

Otingo Equipment Co. wants to prepare interim financial statements for the first quarter. The company wishes to avoid making a physical count of inventory. Otingo’s gross profit rate averages 35%. The following information for the first quarter is available from its records.

$$\begin{array}{lr} \text{January 1 beginning inventory}&\$802,880\\ \text{Cost of goods purchased}&2,209,636\\ \text{Sales}&3,760,260\\ \text{Sales returns}&79,300\\ \end{array}$$

Required Use the gross profit method to estimate the company’s first quarter ending inventory.

Trini Company had the following transactions for the month.

Calculate the cost of goods sold dollar value for the period for each of the following cost allocation methods, using periodic inventory updating. Provide your calculations.

B. last-in, first-out (LIFO)

Davis & Simpson, a distributor, purchased kitchen shears from different manufacturers.

September 3 700 @ $7.30

September 18 300 @$7.62

September 12 1,200 @ $6.90

September 28 500 @$7.41

The unit value of the beginning inventory of 600 shears was $7.28. Find the value of the ending inventory of 700 shears using FIFO.

Based on the following data, determine the cost of merchandise sold for August:

$$\begin{array}{lr} \text{Merchandise inventory, August}\ 1 & \$120,000\\ \text{Merchandise inventory, August 31}\ & 150,000\\ \text{Purchases} & 780,000\\ \text{Purchases returns and allowances} & 20,000\\ \text{Purchases discounts} & 10,000\\ \text{Freight in} & 5,000 \end{array}$$

The following units of a particular item were available for sale during the calendar year:

The firm uses the weighted average cost method with a perpetual inventory system. Determine the cost of merchandise sold for each sale and the inventory balance after each sale. Present the data in the form illustrated in Exhibit 5.

Kline Products had a beginning inventory of $\$ 635,500$ on January 1 . During the quarter, goods costing $\$ 2,245,600$ were manufactured. The inventory at the end of March was $\$ 785,400$. During the quarter, Kline's net sales were $\$ 3,265,800$.

Jamask, Inc. has $\$ 589,300$ in current liabilities and $\$ 856,410$ in current assets. What is its current ratio, to the nearest tenth?

Boston Bait Shop uses a periodic inventory system. On December 31, Year 2, the accounting records include the following information

$$\begin{array}{|cc} \text {Inventory (as of December 31, Year 1)} & \cdots\cdots\cdots\cdots\cdots\cdots\cdots\cdots & \$2,800 & \\ \text { Net sales } & \cdots\cdots\cdots\cdots\cdots\cdots\cdots\cdots & 79,600 & \\ \text { Purchases } & \cdots\cdots\cdots\cdots\cdots\cdots\cdots & 30,200 & \\ \end{array}$$

A complete physical inventory taken at December 31, Year 2, indicates merchandise costing $\$ 3,000$ remains in stock.
c. Prepare two closing entries at December 31, Year 2: the first to create a Cost of Goods Sold account with the appropriate balance and the second to bring the Inventory account up-to-date.

Using the weighted-average method, compute the equivalent units of production for a new company that started 85,000 units into production and transferred 67,000 to the second department. Assume that beginning inventory was 0. Conversion is considered to occur evenly throughout the process, while materials are added at the beginning of the process. The ending inventory for Equivalent Units: Conversion is 9,000 units.

JC Manufacturing purchased inventory for $5,300 and also paid a$260 freight bill. JC Manufacturing returned 45% of the goods to the seller and later took a 2% purchase discount. What is JC Manufacturing’s final cost of the inventory that it kept? (Round your answer to the nearest whole number.) a. $2,997 b.$2,337 c. $3,117 d.$2,857

Indicate the effects (increase, decrease, no effect) of the following independent transactions on (1) working capital (= current assets – current liabilities) and (2) the quick ratio, where accounts receivable are included but merchandise inventory is excluded from quick assets. State any necessary assumptions.

c. A firm purchases, on account, merchandise inventory costing 410,000.

Wayward Company wants to prepare interim financial statements for the first quarter. The company wishes to avoid making a physical count of inventory. Wayward’s gross profit rate averages 34%. The following information for the first quarter is available from its records.

$$\begin{array}{lr} \text{January 1 beginning inventory}&\$302,580\\ \text{Cost of goods purchased}&\$941,040\\ \text{Sales}&1,211,160\\ \text{Sales returns}&8,410\\ \end{array}$$

Required Use the gross profit method to estimate the company’s first quarter ending inventory.

The following data (in thousands) were taken from recent annual reports of Apple Inc., a manufacturer of personal computers and related products, and American Greetings Corporation, a manufacturer and distributor of greeting cards and related products:

$$\begin{array}{lrr} & \textbf { Apple } & \textbf { American Greetings } \\ \hline \text { Cost of goods sold } & \$ 39,541,000 & \$ 682,368 \\ \text { Inventory, end of year } & 1,051,000 & 179,730 \\ \text { Inventory, beginning of the year } & 455,000 & 163,956 \end{array}$$

Would you expect American Greetings’ inventory turnover to be higher or lower than Apple’s? Why?

Based on the following data, estimate the cost of the ending merchandise inventory:

$$\begin{array}{lr} \text { Sales (net) } & \$ 9,250,000 \\ \text { Estimated gross profit rate } & 36 \% \\ \text { Beginning merchandise inventory } & \$ 180,000 \\ \text { Purchases (net) } & \underline{~~5,945,000} \\ \text { Merchandise available for sale } & \underline{\underline{\$ 6,125,000}} \\ \end{array}$$