Inventory Costing Methods-Periodic Method Archer Company is a retailer that uses the periodic inventory system. August 1 Beginning inventory 190 units of Product A @ $1,600 total cost 5 Purchased 210 units of Product A @ $2,116 total cost 8 Purchased 310 units of Product A @ $4,416 total cost 11 Sold 260 units of Product A Calculate the August cost of goods sold and the ending inventory at August 31 using (a) first-in, first-out, (b) last-in, first-out, and (c) the weighted-average cost methods. Do not round until your final answers. Round your final answers to the nearest dollar.

Closing the Balances in The Variance Accounts at the End of the Year

Yohan Company has the following balances in its direct materials and direct labor variance accounts at year-end:

Unadjusted Cost of Goods Sold equals $1,590,000, unadjusted Work in Process equals $296,000, and unadjusted Finished Goods equals $240,000.

Required:

1. Assume that the ending balances in the variance accounts are immaterial and prepare the journal entries to close them to Cost of Goods Sold. Note: Close the variances with a debit balance first. If an amount box does not require an entry, leave it blank or enter "0".

What is the adjusted balance in Cost of Goods Sold after closing out the variances?

$

2. What if any ending balance in a variance account that exceeds $8,000 is considered material? (a) Close the immaterial variance accounts to Cost of Goods Sold. (b) Prorate the largest of the labor variances among Cost of Goods Sold, Work in Process, and Finished Goods on the basis of prime costs in these accounts. (c) Prorate the largest of the material variances among Cost of Goods Sold, Work in Process, and Finished Goods on the basis of prime costs in these accounts. The prime cost in Cost of Goods Sold is $1,060,000, the prime cost in Work in Process is $164,000, and the prime cost in Finished Goods is $133,000. If an amount box does not require an entry, leave it blank or enter "0".

Note: Round all interim calculations to three decimal places, and round your final answers to the nearest dollar. Adjust credit entry for rounding to ensure debits equal credits in journal entry.

What are the adjusted balances in Work in Process, Finished Goods, and Cost of Goods Sold after closing out all variances?

Closing the Balances in The Variance Accounts at the End of the Year

Yohan Company has the following balances in its direct materials and direct labor variance accounts at year-end:

Unadjusted Cost of Goods Sold equals $1,570,000, unadjusted Work in Process equals $316,000, and unadjusted Finished Goods equals $190,000.

Required:

1. Assume that the ending balances in the variance accounts are immaterial and prepare the journal entries to close them to Cost of Goods Sold. Note: Close the variances with a debit balance first. If an amount box does not require an entry, leave it blank or enter "0".

What is the adjusted balance in Cost of Goods Sold after closing out the variances?

$

2. What if any ending balance in a variance account that exceeds $11,000 is considered material? (a) Close the immaterial variance accounts to Cost of Goods Sold. (b) Prorate the largest of the labor variances among Cost of Goods Sold, Work in Process, and Finished Goods on the basis of prime costs in these accounts. (c) Prorate the largest of the material variances among Cost of Goods Sold, Work in Process, and Finished Goods on the basis of prime costs in these accounts. The prime cost in Cost of Goods Sold is $1,050,000, the prime cost in Work in Process is $160,800, and the prime cost in Finished Goods is $131,000. If an amount box does not require an entry, leave it blank or enter "0".

Note: Round all interim calculations to three decimal places, and round your final answers to the nearest dollar. Adjust credit entry for rounding to ensure debits equal credits in journal entry.

What are the adjusted balances in Work in Process, Finished Goods, and Cost of Goods Sold after closing out all variances?

Closing the Balances in The Variance Accounts at the End of the Year

Yohan Company has the following balances in its direct materials and direct labor variance accounts at year-end:

Unadjusted Cost of Goods Sold equals $1,570,000, unadjusted Work in Process equals $316,000, and unadjusted Finished Goods equals $190,000.

Required:

1. Assume that the ending balances in the variance accounts are immaterial and prepare the journal entries to close them to Cost of Goods Sold. Note: Close the variances with a debit balance first. If an amount box does not require an entry, leave it blank or enter "0".

What is the adjusted balance in Cost of Goods Sold after closing out the variances?

$

2. What if any ending balance in a variance account that exceeds $11,000 is considered material? (a) Close the immaterial variance accounts to Cost of Goods Sold. (b) Prorate the largest of the labor variances among Cost of Goods Sold, Work in Process, and Finished Goods on the basis of prime costs in these accounts. (c) Prorate the largest of the material variances among Cost of Goods Sold, Work in Process, and Finished Goods on the basis of prime costs in these accounts. The prime cost in Cost of Goods Sold is $1,050,000, the prime cost in Work in Process is $160,800, and the prime cost in Finished Goods is $131,000. If an amount box does not require an entry, leave it blank or enter "0".

Note: Round all interim calculations to three decimal places, and round your final answers to the nearest dollar. Adjust credit entry for rounding to ensure debits equal credits in journal entry.

What are the adjusted balances in Work in Process, Finished Goods, and Cost of Goods Sold after closing out all variances?

PA7-1 Analyzing the Effects of Four Alternative Inventory Methods in a Periodic Inventory System [LO 7-3]

Gladstone Company tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the annual accounting period, December 31.

Assuming that for Specific identification method (item 1d) the March 14 sale was selected two-fifths from the beginning inventory and three-fifths from the purchase of January 30. Assume that the sale of August 31 was selected from the remainder of the beginning inventory, with the balance from the purchase of May 1.

Required:

1. Compute the amount of goods available for sale, ending inventory, and cost of goods sold at December 31 under each of the following inventory costing methods: (Round intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.)

1. 2-a. Of the four methods, which will result in the highest gross profit?

multiple choice 1

• Last-in, first-out

• Weighted average cost

• First-in, first-out

• Specific identification

1. 2-b. Of the four methods, which will result in the lowest income taxes?

multiple choice 2

• Last-in, first-out

• Weighted average cost

• First-in, first-out

• Specific identification

PA7-1 Analyzing the Effects of Four Alternative Inventory Methods in a Periodic Inventory System [LO 7-3] Gladstone Company tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period, as if it uses a periodic inventory system.

Assume its accounting records provided the following information at the end of the annual accounting period, December 31. Transactions Units Unit Cost Beginning inventory, January 1 1,500 $ 60 Transactions during the year:

a. Purchase, January 30 2,600 72 b. Sale, March 14 ($100 each) (1,150 )

c. Purchase, May 1 1,300 90 d. Sale, August 31 ($100 each) (1,600 )

Assuming that for Specific identification method (item 1d) the March 14 sale was selected two-fifths from the beginning inventory and three-fifths from the purchase of January 30. Assume that the sale of August 31 was selected from the remainder of the beginning inventory, with the balance from the purchase of May 1.

Required: 1. Compute the amount of goods available for sale, ending inventory, and cost of goods sold at December 31 under each of the following inventory costing methods: (Round intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.) 2-a.

Of the four methods, which will result in the highest gross profit? Last-in, first-out Weighted average cost First-in, first-out Specific identification 2-b. Of the four methods, which will result in the lowest income taxes? Last-in, first-out Weighted average cost First-in, first-out Specific identification

I need the specific identification part

PA7-1 Analyzing the Effects of Four Alternative Inventory Methods in a Periodic Inventory System [LO 7-3]

Mojo Industries tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the accounting period, January 31. The inventory’s selling price is $9 per unit. Transactions Unit Cost Units Total Cost Inventory, January 1 $ 2.50 260 $ 650 Sale, January 10 (200 ) Purchase, January 12 3.00 310 930 Sale, January 17 (150 ) Purchase, January 26 4.00 55 220 Assume that for Specific identification method the January 10 sale was from the beginning inventory and the January 17 sale was from the January 12 purchase. Required: Compute the amount of goods available for sale, ending inventory, and cost of goods sold at January 31 under each of the following inventory costing methods: (Round your intermediate calculations to 2 decimal places and final answers to the nearest dollar amount.)

1. 2-a. Of the four methods, which will result in the highest gross profit?

• Weighted average cost

• First-in, first-out

• Last-in, first-out

• Specific identification

1. 2-b.Of the four methods, which will result in the lowest income taxes?

• Weighted average cost

• First-in, first-out

• Last-in, first-out

• Specific identification

Question 4. Answer the following problem based on the Corporate Financial Analysis textbook. Your answer should be formatted similarly to Figure 13-1 on page 403 of that textbook. (25 pts)

Dinsmore Artists International is in the business of managing “pop” artists in the entertainment industry. It is considering the purchase of an executive jet plane to transport its executives and the artists it represents to various meetings and performance sites. It expects that by owning its own executive jet, it can save $1,400,000 the first year of operation for expenses that it would otherwise incur for buying seats on commercial flights or for chartering flights. It expects that the annual growth in savings would be 10%.

            The choice has narrowed down to two planes: the Aero Commander and the Super Eagle. Both provide the same savings and the same basic service (e.g., the same passenger and luggage capacity, flight speed, and maximum altitude of operation).

            The Aero Commander jet sells for $4,500,000. Its normal operating expenses would be $290,000 the first year and would increase 8% per year thereafter. In addition, there would be a cost of $350,000 for a major engine overhaul at the end of the third year. The cabin noise level in the Aero Commander is lower than in the Super Eagle, and its seats are somewhat more comfortable.

            The Super Eagle jet sells for $3,750,000. Its normal operating expenses would be $325,000 the first year and would increase 8% per year thereafter. In addition, there would be major engine overhauls at the end of the second and fourth years, each of which would cost $300,000.

            Dinsmore uses a WACC or discount rate of 10% and a reinvestment rate of 12% to value its investments in fixed assets. Tax rates are 38% for regular income and 25% for capital gains or losses.

            The jet purchased would be paid for and put into service during the first quarter of Dinsmore’s financial year. It would be depreciated according the appropriate MACRS schedule from (i.e., 7-year life with first-quarter convention).

            Dinsmore expects to sell whichever plane it chooses at the end of the fifth year for 20% of its purchase price.

* * * * * * * * * *

1. What is the net present value, internal rate of return, and modified internal rate of return associated with each of the two jet planes? Based on these values, what action do you recommend Dinsmore to take?

2. What non-financial information should Dinsmore take into consideration before making its final decision? Why might the information be important in Dinsmore’s decision? How might this information change the decision in part 1?

1. Internal resources, such as the legal department, training department, information technology, tend to be under-utilized, leading to a death spiral, when:
   A. managers may choose whether to purchase the service internally or externally
   B. the internal pricing system seeks to recover sunk costs
   C. the internal pricing system utilizes full costs
   D. all of the choices are correct
   
2. Of the following statements, which is true?
   A. Joint costs are incurred only in disassembly
   B. The costs of harvesting a pineapple plantation are additional processing costs
   C. Common costs are incurred only in disassembly
   D. Joint cost allocations are helpful in assessing a product's profitability
   
3. Which of the following would most likely use a job order costing system?
   A. a paper-mill
   B. a swimming pool installer
   C. a company that manufactures chlorine for swimming pools
   D. an oil refinery
   
4. A summary of the materials being issued to production during a period serves as the basis for transferring the cost of the materials from the controlling account in the general ledger to the controlling accounts for
   A. Work in Process and Cost of Goods Sold
   B. Work in Process and Factory Overhead
   C. Finished Goods and Cost of Goods Sold
   D. Work in Process and Finished Goods increases