9.The management of Dayton Ltd. erroneously understated its inventory during 2010by $28,000. Using the information below and assuming there are no distributions of retained earnings:(1) present a brief analysis with the accurate numbers and the numbers in error and (2) explain whether retained earnings would be overstated, understated, or be indifferent to the error at the end of 2011.
2010 Sales: $60,000
2010 Purchases: $50,000
2010 Cost of Goods Sold (before inventory error) $20,000
2011 Sales: $210,000
2011 Purchases: $60,000
2011 Cost of Goods Sold (based on error numbers): $68,000
10.Yale Co. has valued its beginning and ending inventories at $4,000 and $7,000, respectively, during a period where cost of goods sold was $22,000. An auditor found an error in the valuation of the ending inventory and insisted that it be restated to $6,000. Calculate the adjusted cost of goods sold resulting from the inventory restatement.
11.
Summers Company began business on August 1, 2010. During August, Summers made the following purchases:
August 3
|
100 units @ $10
|
$1,000
|
August 21
|
300 units @ $20
|
$6,000
|
Other information provided:
August sales
|
350 units at $50 each
|
August expenses excluding cost of goods sold
|
$7,200
|
August 31 current assets excluding inventory
|
$34,000
|
August 31 current liabilities
|
$26,000
|
Calculate Summers’ August 31 ending inventory under the FIFO and LIFO cost flow assumptions.
12.Yogi Company began operations on July 1. Below is its July income statement and the current portion of its balance sheet dated July 31. Each unit is sold for $80. Under the LIFO method of inventory, Yogi reported the following:
July 3
|
Purchased 60 units @ $50
|
$3,000
|
July 14
|
Purchased 40 units @ $60
|
2,400
|
|
Cost of goods available
|
$5,400
|
July 31
|
Inventory (10 @ $50)
|
500
|
|
Cost of goods sold
|
$4,900
|
Complete the following income statement and current portion of the balance sheet for Yogi for July using the FIFO cost flow assumption instead of LIFO.
Sales revenue . . . . . . . . . . . . . . . . . _____________________
Cost of goods sold . . . . . . . . . . . . . ._____________________
Gross profit . . . . . . . . . . . . . . . . . . . _____________________