Question

Problem 8-1 The following independent situations relate to inventory accounting. Answer the following questions about inventories.

Metlock Co. purchased goods with a list price of $168,300, subject to trade discounts of 20% and 10%, with no cash discounts allowable. How much should Metlock Co. record as the cost of these goods? Cost of goods purchased $

Windsor Corp. had 1,880 units of part M.O. on hand May 1, 2017, costing $29 each. Purchases of part M.O. during May were as follows. Units Units Cost May 9 2,380 $30 17 3,880 32 26 1,380 33 A physical count on May 31, 2017, shows 2,380 units of part M.O. on hand. Using the FIFO method, what is the cost of part M.O. inventory at May 31, 2017? Using the LIFO method, what is the inventory cost? Using the average-cost method, what is the inventory cost? (Round average cost per unit to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 1,620.) FIFO LIFO Average Cost Inventory Cost $ $ $

Sheridan Company adopted the dollar-value LIFO method on January 1, 2017 (using internal price indexes and multiple pools). The following data are available for inventory pool A for the 2 years following adoption of LIFO. Inventory At Base-Year Cost At Current-Year Cost 1/1/17 $206,800 $206,800 12/31/17 226,500 271,800 12/31/18 232,600 288,424 Computing an internal price index and using the dollar-value LIFO method, at what amount should the inventory be reported at December 31, 2018? December 31, 2018 Price Index Dollar-value LIFO inventory $

Skysong Inc., a retail store chain, had the following information in its general ledger for the year 2018. Merchandise purchased for resale $884,460 Interest on notes payable to vendors 8,450 Purchase returns 15,210 Freight-in 23,530 Freight-out (delivery expense) 15,750 Cash discounts on purchases 6,848 What is Skysong’s inventoriable cost for 2018? Skysong’s inventoriable cost for 2018 $

Answer 1

Problem 1 - Metlock Co. purchased goods with a list price of $168,300, subject to trade discounts of 20% and 10%, with no cash discounts allowable. How much should Metlock Co. record as the cost of these goods ?

Solution:

List price = $168,300

First discount = $168,300*20% = $33,660

Second discount = ($168,300 - $33,660)*10% = $13,464

Cost of goods = $168,300 - $33,660 - $13,464 = $121,176

Metlock Co. should record the cost of these goods as $121,176

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