Question

QUESTION 1

1. Lannister Inc. holds 12,000 units of inventory on January 1, 2017. Under FIFO the inventory lot costs are:

   Inventory Lot	Date	Units	Cost / Unit	Total Cost
   H	12/13/2016	6,000	$120	$720,000
   I	12/22/2016	6,000	$125	$750,000

   Under LIFO the same inventory lots costs are:

   Inventory Lot	Date	Units	Cost / Unit	Total Cost
   A	4/22/2012	2,000	$60	$120,000
   F	10/15/2014	4,000	$84	$336,000
   I	12/22/2016	6,000	$125	$750,000

   Under average cost the same 12,000 inventory units have a total cost of $1,320,300.

   Lannister uses a periodic inventory system.

   During January 2017, Lannister records the following transactions (in chronological order):

   • Sells 2,000 units of inventory with revenue of $175 per unit.
   • Purchases 4,000 units of inventory at a cost of $130 per unit.
   • Sells 5,000 units of inventory with revenue of $180 per unit.
   • Purchases 3,000 units of inventory at a cost of $132 per unit.
   • Sells 4,000 units of inventory with revenue of $184 per unit.
   1. What is Lannister’s total sales revenue for January?
   2. How many units of inventory did Lannister have available for sale during the month of January?
   3. How many units did Lannister have in ending inventory  on January 31, 2017?
   4. Using FIFO, what was Lannister’s cost of goods available for sale (COGAS) for January?
   5. Using FIFO, what was the value of Lannister’s ending inventory on January 31, 2017?
   6. Using FIFO, what was Lannister’s cost of goods sold (COGS) for January?
   7. Using LIFO, what was Lannister’s cost of goods available for sale (COGAS) for January?
   8. Using LIFO, what was the value of Lannister’s ending inventory on January 31, 2017?
   9. Using LIFO, what was Lannister’s cost of goods sold (COGS) for January?
   10. Using average cost, what was Lannister’s cost of goods available for sale (COGAS) for January?
   11. Based on your answer to j above, what was average cost per unit of inventory available for sale during January? For this question only, enter your answer in dollars and cents (xx.xx) without a $ sign.  
   12. Using average cost, what was the value of Lannister’s ending inventory on January 31, 2017?
   13. Using average cost, what was Lannister’s cost of goods sold (COGS) for January?
   14. If a company reports inventory value of $40,000 using LIFO, and its LIFO reserve is $25,000, what value for inventory would it have reported if it had used FIFO instead?

14 points   

QUESTION 2

1. Cullumber Company sells coffee beans, which are sensitive to price fluctuations. The following inventory information is available for this product at December 31, 2017:

   Coffee Bean Type	Units of inventory	Unit cost	Market Value/Unit
   Coffea Arabica	14,200	$5.30	$5.24
   Coffea robusta	5,100	$3.70	$3.80

   
   
   Calculate the value Cullumber should report for ending inventory on December, 31, 2017 after applying the lower-of-cost-or-market rule.

QUESTION 3

1. In its 10-K filing for fiscal year 2019, Apple Inc. reported annual cost of goods sold (inmillions) of $144,996. Ending inventory balances were $4,106 at 9/28/19 and $3,956 at 9/29/18 (also in millions).

   1. Calculate Apple’s inventory turnover ratio for FY 2019. Round your answer to one decimal place (e.g., xx.x).
   2. Using the rounded answer to part a, calculate Apple’s Days in Inventory value for FY 2019. Round your answer to one decimal place (e.g., xx.x).

Answer 1

What is Lannister’s total sales revenue for January?

Total Sales Revenue=2000*$175+5000*$180+4000*$184=$1,986,000

How many units of inventory did Lannister have available for sale during the month of January?

Beginning Inventory=12,000 units

Purchased=4000+3000=7,000units

Available for sale=12000+7000=19,000 units

How many units did Lannister have in ending inventory  on January 31, 2017?

Available for sale=19,000 units

Units sold=2000+5000+4000=11,000

Ending Inventory =19000-11000=8,000 units

Using FIFO, what was Lannister’s cost of goods available for sale (COGAS) for January?

Cost of goods available for sale:

Beginning inventory=(720000+750000)=$1,470,000

Goods purchased=(4000*130+3000*132)=$916,000

Cost of Goods Available for Sale(COGAS)=(1470000+916000)=$2,386,000

Using FIFO, what was the value of Lannister’s ending inventory on January 31, 2017?

                             

Units	Cost per unit	Total Cost
3000	$132	$396,000
4000	$130	$520,000
1000	$125	$125,000
8000	TOTAL	$1,041,000

Ending Inventory=$1,041,000

Using FIFO, what was Lannister’s cost of goods sold (COGS) for January?

Cost of Goods Sold (COGS)= Cost of Goods Available for Sale(COGAS)- Ending Inventory=2,386,000-1,041,000=$1,345,000

Using LIFO, what was Lannister’s cost of goods available for sale (COGAS) for January?

Cost of goods available for sale:

Beginning inventory=(120000+336000+750000)=$1,206,000

Goods purchased=(4000*130+3000*132)=$916,000

Cost of Goods Available for Sale(COGAS)=(1206000+916000)=$2,122,000

Using LIFO, what was the value of Lannister’s ending inventory on January 31, 2017?

Units	Cost per unit	Total Cost
2000	$60	$120,000
4000	$84	$336,000
2000	$125	$250,000
8000	TOTAL	$706,000

Ending Inventory=$706,000

Using LIFO, what was Lannister’s cost of goods sold (COGS) for January?

Cost of Goods Sold (COGS)= Cost of Goods Available for Sale(COGAS)- Ending Inventory=2,122,000-706,000=$1,416,000

Using average cost, what was Lannister’s cost of goods available for sale (COGAS) for January?

Beginning Inventory=$1,320,300

Purchase during January=$916,000

Cost of goods available for sale=$2,236,300

Based on your answer to j above, what was average cost per unit of inventory available for sale during January?

Cost of goods available for sale=2236300

Number of units available for sale=19000

Cost per unit of inventory=2236300/19000=117.70

Using average cost, what was the value of Lannister’s ending inventory on January 31, 2017?

Value of Ending Inventory=8000*117.70=$941,600

Using average cost, what was Lannister’s cost of goods sold (COGS) for January?

Cost of Goods Sold (COGS)= Cost of Goods Available for Sale(COGAS)- Ending Inventory=2236300-941600=$1,294,700