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.

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 beginning inventory was 160 units with a unit value of $6.85 . Use LIFO to find the value of the ending inventory of 300 units.

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.

Date	Activities
March 7	30,000 units @$18.00 each
May 25	39,000 units @ $20.00 each
August 1	23,000 units @$25.00 each
November 10	35,000 units @ $26.00 each

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.)

Financial statement data for years ending December 31 for Holland Company follow:

$$\begin{array}{lrr} & \mathbf{2 0 Y 4} & \mathbf{2 0 Y 3} \\ \hline \begin{array}{l} \text { Cost of merchandise sold } \\ \text { Inventories: } \end{array} & \$ 4,504,500 & \$ 3,715,200 \\ \quad \text { Beginning of year } & 788,000 & 760,000 \\ \quad \text { End of year } & 850,000 & 788,000 \end{array}$$

a. Determine the inventory turnover for $20 \mathrm{Y} 4$ and $20 \mathrm{Y} 3$.

b. Determine the days' sales in inventory for $20 \mathrm{Y} 4$ and 20Y3. Use 365 days and round to one decimal place.

c. Does the change in inventory turnover and the days' sales in inventory from $20 \mathrm{Y} 3$ to $20 \mathrm{Y} 4$ indicate a favorable or an unfavorable trend?

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

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.

Date	Activities
January 4	11,500 units @$33 each
May 18	13,400 units @ $32 each
July 9	11,000 units @$29 each
November 21	7,600 units @ $27 each

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.)

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

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

Whittier Construction Co. had followed the practice of expensing all materials assigned to a construction job without recognizing any salvage inventory. On December 31, 2012, it was determined that salvage inventory should be valued at $52,000. Of this amount,$29,000 arose during the current year. How does this information affect the financial statements to be prepared at the end of 2012?

The recent financial statements of McLelland Clothing Inc. include the following data: |Particulars|Amount| |-|-:| Sales| $754,690 Cost of goods sold:$    $Computed under FIFO| 528,600$    $Computed under LIFO |555,000 Average inventory:$    $Computed under FIFO |72,200$    $Computed under LIFO| 45,800 **Required:** Calculate McLelland’s gross profit ratio (rounded to two decimal places), inventory turnover ratio (rounded to three decimal places), and the average days to sell inventory (assume a 365-day year and round to two decimal places) using the LIFO inventory costing method. Be sure to explain what each ratio means.

The Zonex Plumbing and Supply Company purchased these quantities of water heaters from April 1 to June 30: April 28, 41 @ $146; May 19, 53 @$139; June 23, 21 @ $149. The April 1 beginning inventory of 27 units was valued at$141 each. Find the value of the ending inventory of 35 water heaters:

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.

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

Date	Particulars	Amount
Jan. 1	Inventory	8,000 units at $40
Apr. 19	Sale	5,000 units
June 30	Purchase	12,000 units at$48
Sept. 2	Sale	9,000 units
Nov. 15	Purchase	2,000 units at $50

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.

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

$$\begin{array}{lrr} \text { Sales (net) } & \$ 1,450,000 \\ \text { Estimated gross profit rate } & 42 \% \\\\ \text { Beginning merchandise inventory } & \$~~~~100,000 \\ \text { Purchases (net) } & \underline{~~~~~~860,000}\\ \text { Merchandise available for sale } & \underline{\underline{\$~~~~960,000}} \end{array}$$

Sun Company is trying to determine the value of its ending inventory as of March 31, 2014, the company’s year-end. The following transactions occurred, and the accountant asked your help in determining whether they should be recorded or not.

(c) Sun had $750 of consigned goods from Frederick Inc.

Instructions

For each of the above transactions, specify whether the item in question should be included in ending inventory, and if so, at what amount. For each item that is not included in ending inventory, indicate who owns it and what account, if any, it should have been recorded in.