Reference no: EM131753030
1. Yorkins Inc. was organized on January 1, 2012. On December 31, 2013, the company lost most of its inventory in a warehouse fire just before the year end count of inventory. Data from records is disclosed below:
12/31/12 12/31/113
Beginning Inventory $0 $ 60,000
Purchases 300,000 400,000
Purchases returns & allowances 12,000 18,000
Sales 305,714 495,000
Sales returns & allowances 2,000 4,000
On January 1, 2013, the company's pricing policy was changed so that the gross profit rate would increase by 3%. Salvaged undamaged merchandise was marked to sell at $ 35,000 while damaged merchandise marked to sell at $ 30,000 had an estimated value of $ 8,000.
Determine the company's inventory loss using gross profit method.
2. Calculate what the correct net income should have been using both the long and short methods to correct inventory errors and the following information.
2010 2011 2012 2013
Incorrect net income 32,000 46,000 (20,000) 40,000
Ending inventory understated 8,000 5,000 9,000
Ending inventory overstated 12,000
3. The Wonder Inc manufactures a single product. On December 31, 2009, the company
adopted the dollar value lifo method. The inventory method that date was based on
$ 210,000. Other inventory data follows:
Year-end date Year-end inventory Price Index
12/31/10 240,000 1.04
12/31/11 260,000 1.05
12/31/12 248,000 1.07
12/31/13 238,000 1.03
Provide an excel worksheet using the dollar value method for the above information.
4. The Springbreak Company uses the retail inventory method. Information relating to the computation of the inventory at December 31, 2013 follows:
Freight In 9,000
Sales 268,800
Net markups 22,000
Net markdowns 30,000
Sales discounts 24,000
Sales returns 36,000
Purchases discounts 42,000
Cost Retail
Beginning Inventory 50,000 80,000
Purchases $ 240,000 $ 396,000
Complete using lower the cost or market retail method.
Complete using the average cost method.
5. Gross method and Net Method of recording purchases and making invoice payments. Baker Inc purchased goods from Hershey Inc. on February 10, 2013 costing $ 46,000 with the following terms: Cash Discount of 3/10, n30.
Record the purchase and payment entry under gross method assuming they paid on February 15, 2013.
Record the purchase and payment entry under net method assuming they paid on February 15, 2013.
Record the payment entry for both gross and net method if they paid on February 25, 2013.