Chapter 08 Inventories and the Cost of Goods Sold

| March 13, 2016

26. Shrinkage losses
At year-end, the perpetual inventory records of James Products indicate 105 units of a particular product in inventory, acquired at the following dates and unit costs:
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However, a complete physical inventory taken at year-end indicates only 93 units of this product actually are on hand.
Determine the dollar amount of the shrinkage loss assuming that James uses:
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127. Lower-of-cost-or-market
Elite Systems sells a single product. At December 31, the company’s perpetual inventory records indicate 2,500 units on hand with a total cost (FIFO basis) of $155,000. The replacement cost of this product at this date is $35 per unit.
Prepare journal entries to record (a) the write-down of the inventory to the lower-of-cost-or-market value at December 31, and (b) the cash sale of 100 units on January 4 at a retail price of $50 per unit.
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(a) Dec. 31
(b) Jan. 4

128. Periodic inventory systems
Funky Fashions uses a periodic inventory system. The beginning inventory of a particular product, and the purchases during the current year, were as follows:
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At December 31, the ending inventory of this product consisted of 1,300 units.
Determine the cost of the year-end inventory and the cost of goods sold for this product under each of the following methods of inventory valuation:
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129. Periodic inventory systems
Tres Chic uses a periodic inventory system. The beginning inventory of a particular product, and the purchases during the current year, were as follows:
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At December 31, the ending inventory of this product consisted of 850 units.
Determine the cost of the year-end inventory and the cost of goods sold for this product under each of the following methods of inventory valuation (Rounded):
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130. Effects of errors in inventory valuation
Show the effect, if any, of each of the following errors on ending inventory, cost of goods sold, gross profit on sales, and net income by placing the appropriate symbol in each column. In use is the periodic inventory system. Use the following symbols: O = overstated, U = understated, NE = no effect.
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