On January 1, 20X1, ABC Company’s first day of operations, the company purchased $250,000 of finished...

On January 1, 20X1, ABC Company’s first day of operations, the company purchased $250,000 of finished goods inventory. The company decided to employ the dollar-value LIFO method for reporting its inventory. The following table includes inventory information from 20X1-20X4: Date Inventory at current cost Cost index 12/31/20X1 $315,000 1.05 12/31/20X2 $378,000 1.08 12/31/20X3 $352,000 1.10 12/31/20X4 $421,200 1.17 2.5 points each A. Determine the appropriate inventory valuation at 12/31/X1. (2.5 points) B. Determine the appropriate inventory valuation at 12/31/X2. (2.5 points) C. Determine the appropriate inventory valuation at 12/31/X3. (2.5 points) D. Determine the appropriate inventory valuation at 12/31/X4. (2.5 points)

Solutions

Expert Solution

DATE	Ending Inventory (Current year prices)	Cost Index	Ending Inventory (Base year prices)= Inventory at current cost/Cost index	Change from previous year
DATE	Ending Inventory (Current year prices)	Cost Index		Change from previous year
31/12/2010	250000	1	250000.00
31/12/2011	315000	1.05	300000.00	50000.00
31/12/2012	378000	1.08	350000.00	50000.00
31/12/2013	352000	1.1	320000.00	-30000.00
31/12/2014	421200	1.17	360000.00	40000.00

DATE	Ending Inventory at Base Year Prices	Layers (Base Year Prices)	Cost Index	Ending Inventory at LIFO Cost	Appropriate Inventory
DATE	Ending Inventory at Base Year Prices	Layers (Base Year Prices)	Cost Index	Ending Inventory at LIFO Cost	Appropriate Inventory	31/12/2010	250000	250000	1	250000	250000
31/12/2011	300000	250000	1	250000
		50000(300000-250000)	1.05	52500	302500
31/12/2012	350000	250000	1	250000
		50000(300000-250000)	1.05	52500
		50000(350000-300000)	1.08	54000	356500
31/12/2013	320000	250000	1	250000
		50000(300000-250000)	1.05	52500
		20000(50000-30000loss)	1.08	21600	324100
31/12/2014	360000	250000	1	250000
		50000(300000-250000)	1.05	52500
		20000(50000-30000loss)	1.08	21600

		40000(360000-320000)	1.17	46800	370900

We have taken the opening Inventory purchased in 20X1 as closing inventory on 31/10/20X0.

In place of x in years we have taken 1 i.e. 20X1 is 2011 and so on.

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Paula Coal Company purchased equipment for $270,000 on January 2, 2021, its first day of operations....

Paula Coal Company purchased equipment for $270,000 on January 2, 2021, its first day of operations. For book purposes, the equipment will be depreciated using the straight-line method over three years with no salvage value. Pretax financial income and taxable income are as follows: 2021 2022 2023 Pretax financial income $156,000 $170,000 $180,000 Taxable income 120,000 170,000 216,000 The temporary difference between pretax financial income and taxable income is due to the use of accelerated depreciation for tax purposes. Required...

On January 1, 20X1, Warner Corporation purchased 40% of the common stock of ABC Corporation for...

On January 1, 20X1, Warner Corporation purchased 40% of the common stock of ABC Corporation for $400,000. This purchase gives Warner a significant influence in ABC?s operations. During the year, ABC earned total net income of $200,000 and paid total dividends of $40,000 to common stockholders. The fair market value of the stock at year end is $450,000. Prepare the required 20X1 journal entries for the Warner Corporation?s purchase of stock in ABC Corporation:

On January 1, 20X1, Porta Corporation purchased Swick Company’s net assets and assigned goodwill of $80,900...

On January 1, 20X1, Porta Corporation purchased Swick Company’s net assets and assigned goodwill of $80,900 to Reporting Division K. The following assets and liabilities are assigned to Reporting Division K on the acquisition date: Carrying Amount Fair Value Cash $ 14,900 $ 14,900 Inventory 56,900 71,900 Equipment 179,000 199,000 Goodwill 80,900 Accounts Payable 30,900 30,900 Required: On December 31, 20X3, Porta must test goodwill for impairment. Determine the amount of goodwill to be reported for Division K and the...

On January 1, 20X1, Porta Corporation purchased Swick Company’s net assets and assigned goodwill of $80,900...

Jasmine Company purchased equipment on January 1, 20x1. This is the only equipment that Jasmine company...

Jasmine Company purchased equipment on January 1, 20x1. This is the only equipment that Jasmine company owns. The following information relates to this equipment: Initial cost $320,000 Estimated residual value $19,000 Expected useful life 8 years Estimated hours of useful life 22,000 hours Depreciation method Straight-line Hours operated during 20x1 2,400 hours Hours operated during 20x2 2,000 hours Jasmine Company would report $ of depreciation expense in its December 31, 20x1 income statement and $ of depreciation expense in its...

Prime Corporation acquired 100 percent ownership of Steak Products Company on January 1, 20X1, for $250,000....

Prime Corporation acquired 100 percent ownership of Steak Products Company on January 1, 20X1, for $250,000. On that date, Steak reported retained earnings of $70,000 and had $110,000 of common stock outstanding. Prime has used the equity-method in accounting for its investment in Steak. The trial balances for the two companies on December 31, 20X5, appear below. Prime Corporation Steak Products Company Item Debit Credit Debit Credit Cash & Receivables $ 53,000 $ 75,000 Inventory 270,000 100,000 Land 90,000 90,000...

At the beginning of its first year of operations on January 1, 2019, Blue Company’s accounts...

At the beginning of its first year of operations on January 1, 2019, Blue Company’s accounts show the following. Mohammed 160,000 SR Ali 80,000 SR Khalid 50,000 SR The net income or net loss for 2019 has not been closed to the partners’ capital accounts. Required: Journalize the entry to record the division of net income for 2019 under each of the following independent assumptions (you can prepare a schedule showing the distribution of net income to help you in...

Pirate Company purchased 60 percent ownership of Ship Corporation on January 1, 20X1, for $82,800. On...

Pirate Company purchased 60 percent ownership of Ship Corporation on January 1, 20X1, for $82,800. On that date, the noncontrolling interest had a fair value of $55,200 and Ship reported common stock outstanding of $100,000 and retained earnings of $20,000. The full amount of the differential is assigned to land to be used as a future building site. Pirate uses the fully adjusted equity method in accounting for its ownership of Ship. On December 31, 20X2, the trial balances of...

(b Stevenson Company purchased equipment for $250,000 on January 1, 2010. The estimated salvage value is...

(b Stevenson Company purchased equipment for $250,000 on January 1, 2010. The estimated salvage value is $50,000, and the estimated useful life is 5 years. The straight-line method is used for depreciation. On July 1, 2013 Stevenson sold the equipment for $100,000. The journal entry to record the sale of the equipment will include. (5 points) A. A debit to cash of $100,000, a credit to equipment of $250,000 B. A credit to accumulated depreciation of $140,000 C. A debit...

1. On January 1, 2019, ABC Company purchased a new piece of equipment. The equipment was...

1. On January 1, 2019, ABC Company purchased a new piece of equipment. The equipment was assigned a $7,000 residual value and is expected to produce a total of 60,000 units over its life. The depreciation expense reported on the equipment for 2019 was $10,734. During 2020, the equipment was used to produce 9,000 units. At December 31, 2020, the book value of the equipment was $57,466. ABC Company is using the units-of-production depreciation method to depreciate the equipment. Calculate...

Subjects