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

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

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?

Seminole Co. began the year with 23,000 units of product in its January 1 inventory costing $15 each. It made four purchases of its product during the year as follows. The company uses a periodic inventory system. On December 31, a physical count reveals that 40,000 units of its product remain in inventory.

Required

1. Compute the number and total cost of the units available for sale during the year.

2. Compute the amounts assigned to ending inventory and the cost of goods sold using (a) FIFO, (b) LIFO, and (c) weighted average. (Round all amounts to cents.)

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.

It is December 31, end of the year, and the controller of Cornell Corporation is applying the lower-of-cost-or-market (LCM) rule to inventories. Before any year-end adjustments, Cornell reports the following data:

$$\begin{matrix} \text{Cost of goods sold........................................... } & \text{\$420,000}\\ \text{Historical cost of ending inventory, as determined by a physical count...............} & \text{65,000}\\ \end{matrix}$$

Cornell determines that the replacement cost of ending inventory is $49,000. Show what Cornell should report for ending inventory and for cost of goods sold. Identify the financial statement where each item appears.

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.

The Corner Frame Shop wants to know the effect of different inventory costing methods on its financial statements. Inventory and purchases data for June are:

$$\begin{array}{rlrrr} && \textbf{Units} & \textbf{Unit Cost} & \textbf{Total Cost}\\ \\ \text{Jun 1} & \text{Beginning inventory} & 2,500 & \$11.00 & \$27,500\\ 4 & \text{Purchase} & 1,800 & \$11.80 & 21,240\\ 9 & \text{Sale} & (1,900)\\ \end{array}$$

If The Corner Frame Shop uses the LIFO method, cost of goods sold will be

a. $21,200.

b.$21,240.

c. $20,900.

d.$22,340.

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.

Davidson Hardware does not expect prices to change dramatically and wants to use a method that averages price changes. Requirements

1. Which inventory method would best meet Davidson’s goal?
2. What if Davidson wanted to expense out the newer purchases of goods instead? Which inventory method would best meet that need?

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 Playa Company uses a periodic inventory system. The following information is taken from Playa’s records. Certain data have been intentionally omitted ($ in thousands).

Required: Determine the missing numbers. Show computations where appropriate.

Seneca Co. began the year with 6,500 units of product in its January 1 inventory costing $35 each. It made four purchases of its product during the year as follows. The company uses a periodic inventory system. On December 31, a physical count reveals that 8,500 units of its product remain in inventory.

Required

1. Compute the number and total cost of the units available for sale during the year.

2. Compute the amounts assigned to ending inventory and the cost of goods sold using (a) FIFO, (b) LIFO, and (c) weighted average. (Round all amounts to cents.)

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.

Use the following data from Marvel Company for the month of July to answer the question.

Assume that Marvel uses a perpetual LIFO inventory system. What is the dollar value of its ending inventory?
a.$2,940
b. $2.685
c.$2,625
d. $2,852
e.$2,705