Exercise 8-13 Altira Corporation: Inventory cash flow methods, periodic system

Altira Corporation uses a periodic inventory system. The following information related to its merchandise inventory during the month of August 2011 is available:

Required:

Determine the inventory balance Altira would report in its August 31, 2011, balance sheet and the cost of goods sold it would report in its August 2011 income statement using each of the following cost flow methods: 

1. First-in, first-out (FIFO) 

2. Last-in, first-out (LIFO) 

3. Average cost

Exercise 8-14 Altira Corporation: Inventory cost flow methods; perpetual system

[This is a variation of Exercise 8–13 modified to focus on the perpetual inventory system and alternative cost flow methods.]

Altira Corporation uses a perpetual inventory system. The following transactions affected its merchandise inventory during the month of August 2011:

Required:

Determine the inventory balance Altira would report in its August 31, 2011, balance sheet and the cost of goods sold it would report in its August 2011 income statement using each of the following cost flow methods: 

1. First-in ,first-out (FIFO) 

2. Last-in, first-out (LIFO) 

3. Average cost

Requirement 1

FIFO (First-in, first-out)

Steelcase Inc. is the global leader in providing furniture for office environments. The company uses the LIFO inventory method for external reporting and for income tax purposes but maintains its internal records using FIFO. The following disclosure note was included in a recent annual report:

Required:

1. Steelcase adjusts the LIFO reserve at the end of its fiscal year. Prepare the February 27, 2009, adjusting entry to make the cost of goods sold adjustment.

2. If Steelcase had used FIFO to value its inventories, what would cost of goods sold have been for the 2009 fiscal year?

Requirement 1

February 27, 2009  ($ in millions)

LIFO reserve     ($29.6 – 27.2) ……………………………………… 2.4

Cost of     goods sold ……………………………………………. 2.4

Requirement 2

Cost of goods sold (2009) = $2,236.7 + $2.4 = $2,239.1 million 

Problem 8-5 Ferris Company: Various inventory costing methods

Ferris Company began 2011 with 6,000 units of its principal product. The cost of each unit is $8. Merchandise transactions for the month of January 2011 are as follows:

Required:

Calculate January’s ending inventory and cost of goods sold for the month using each of the following alternatives: 

1. FIFO, periodic system 

2. LIFO, periodic system

3. LIFO, perpetual system 

4. Average cost, periodic system 

5. Average cost, perpetual system

Exercise 9-21 Lance-Hefner Specialty Shoppes: Dollar-value LIFO retail 

Lance-Hefner Specialty Shoppes decided to use the dollar-value LIFO retail method to value its inventory. Accounting records provide the following information:

Required:

Determine ending inventory and cost of goods sold

Solution E9-21

Problem 9-1 Decker Company: Lower of cost or market

Decker Company has five products in its inventory. Information about the December 31, 2011, inventory follows.

Required:

1. Determine the balance sheet inventory carrying value at December 31, 2011, assuming the LCM rule is applied to individual products.

2. Determine the balance sheet inventory carrying value at December 31, 2011, assuming the LCM rule is applied to the entire inventory. Also, assuming that Decker recognizes an inventory write-down as a separate income statement item, determine the amount of the loss.