1. Here Co.'s inventory at December 31, 2011, was $1,500,000 based on a physical count priced at cost, and before any necessary adjustment for the following:
? Merchandise costing $90,000, shipped f.o.b. shipping point from a vendor on December 30, 2011, was received and recorded on January 5, 2012.
? Goods in shipping area were excluded from inventory although shipment was not made until January 4, 2012. The goods, billed to the customer f.o.b. shipping point on December 31, 2011, had a cost of $120,000.
What amount should Herc report as inventory in its December 31, 2011, balance sheet?
2. Dixon Menswear Shop regularly buys shirts from Colt Company. Dixon purchased shirts from Colt on May 27, and received an invoice with a list price amount of $3,600 and payment terms of 2/10, n/30. Dixon uses the net method to record purchases. Dixon should record the purchase at
3. Esquire Corp. uses the periodic inventory system. During its first year of operations, Esquire made the following purchases (listed in chronological order of acquisition):
? 20 units at $50
? 35 units at $40
? 85 units at $30
Sales for the year totaled 135 units, leaving 5 units on hand at the end of the year.
Ending inventory using the average cost method is
4. Using the same information in #3 ending inventory using the FIFO method is:
5. Using the same information in #3 ending inventory using the LIFO method is:
This solution illustrates how to determine what should be included in inventory, how to record inventory net of discounts given, and how to value inventory using three flow assumptions (FIFO, LIFO, and average-cost).