Quiz 4  3311 

 

  1. Cooperstown Sports, Inc. has four products in its inventory. Information about the December 31, 2000, inventory is as follows:

 

Product

Total cost

Total Replacement cost

Selling price

Gloves

$360,000

$330,000

$375,000

Bats

  260,000

  240,000

  400,000

Balls

  150,000

  110,000

  125,000

Uniforms

  900,000

  800,000

  1,000,000

 

The disposal cost is 10% of selling price except for balls that has a disposal cost of 15%. The normal gross profit percentage is 20% of sales.

 

Required:

  1. Determine the balance sheet inventory carrying value at December 31, 2000 assuming the LCM  rule is applied to individual products.
  2. Assuming that Cooperstown recognizes an inventory write-down as a separate income statement item, determine the amount of the loss.

 

 

  1. Infomania Corp. uses the retail inventory method to estimate ending inventory and cost of goods sold. Data for the year 2000 is as follows:

 

 

Cost

Retail

Beginning inventory

$140,000

$280,000

Purchases

  420,000

  690,000

Freight in

    16,000

 

Purchase returns

    12,000

   18,000

Net markups

 

   24,000

Net markdowns

 

   26,000

Normal spoilage

 

     5,000

Abnormal spoilage

7,000

   10,000

Sales

 

 650,000

Sales returns

 

   20,000

Employee discounts

 

    6,000

 

The company records sales net of employee discounts.

 

Required:

Estimate Infomania’s ending inventory and cost of goods sold for the year using the retail inventory method and the following applications:

 

    1. Average cost
    2. LCM method
    3. LIFO method
    4. FIFO method