Short Problems
1.Bisbee Ltd. has been fraudulently overstating its inventory in order to "pump up" a lagging income. It started this practice on January 1, 2010 and overstated the 2010 income by $9,000. By what amount will they have to overstate December 31, 2011 inventory in order to overstate 2011 income by $14,000?
Use the information that follows concerning Bradley Corporation to answer problems 2- 5.
Bradley Corporation began business on January 1. During January, Bradley reported the following:
January 1 purchase:
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100 units @ $10 =
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$1,000
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January 10 purchase:
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150 units @ $14 =
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$2,100
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January sales:
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200 units
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2.Determine the amount of inventory to report on Bradley’s balance sheet at January 31 under the FIFO cost flow assumption.
3.Determine the amount of inventory to report on Bradley’s balance sheet at January 31 under the LIFO cost flow assumption.
4.Determine the amount of the inventory valuation on January 31 under the averaging cost flow assumption.
5.Determine the amount of cost of goods sold under the FIFO cost flow assumption for the month of January.
6.Warren Trading pays for its inventory purchases with cash. Beginning inventory is $3,000, purchases were $19,000, and cost of goods sold is $18,000. Determine the cost of Warren’s ending inventory.
7.How much will Cinci report as cost of goods sold using LIFO during March?
8.
Calculate cost of goods sold during March under the averaging cost flow assumption.