PROBLEMS: SET C P6-1C Giles Manufacturing uses a periodic inventory system and has the following transactions for the month of June 2012:

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5 Calculate ending inventory cost of goods sold for four inventory methods (LO 3) PROBLEMS: SET C P6-1C Giles Manufacturing uses a periodic inventory system and has the following transactions for the month of June 2012: Date Transactions Units Cost per Total Cost Unit June 1 Beginning inventory 17 $240 $ 4,080 June 7 Sale 12 June 12 Purchase ,990 June 15 Sale 11 June 24 Purchase ,080 June 27 Sale 15 June 29 Purchase ,680 $11,830 Required: 1. Calculate ending inventory and cost of goods sold at June 30, 2012, using the specific identification method. The June 7 sale consists of beginning inventory, the June 15 sale consists of three units from beginning inventory and eight from the June 12 purchase, and the June 27 sale consists of one unit from beginning inventory and fourteen units from the June 24 purchase. 2. Using FIFO, calculate ending inventory and cost of goods sold at June 30, Using LIFO, calculate ending inventory and cost of goods sold at June 30, Using weighted-average cost, calculate ending inventory and cost of goods sold at June 30, 2012.

6 Calculate ending inventory, cost of goods sold, sales revenue, and gross profit for four inventory methods (LO 3, 4) P6-2C Nadal Athletic uses a periodic inventory system and has the following transaction related to its inventory for the month of August 2012: Date Transactions Units Cost per Total Cost Unit August 1 Beginning inventory 7 $130 $ 910 August 4 Sale ($150 each) 5 August 11 Purchase ,080 August 13 Sale ($160 each) 7 August 20 Purchase ,320 August 26 Sale ($170 each) 10 August 29 Purchase ,200 $4,510 Required: 1. Calculate ending inventory and cost of goods sold at August 31, 2012, using the specific identification method. The August 4 sale consists of units from beginning inventory, the August 13 sale consists of units from the August 11 purchase, and the August 26 sale consists of two units from beginning inventory and eights units from the August 20 purchase. 2. Using FIFO, calculate ending inventory and cost of goods sold at August 31, Using LIFO, calculate ending inventory and cost of goods sold at August 31, Using weighted-average cost, calculate ending inventory and cost of goods sold at August 31, Calculate sales revenue and gross profit under each of the four methods. 6. Comparing FIFO and LIFO, which one provides the more meaningful measure of ending inventory? Explain. 7. If Pete s chooses to report inventory using LIFO, record the LIFO adjustment.

7 Record transactions P6-3C At the beginning of June, Chow Company has a balance in inventory of and prepare a partial $2,100. The following transactions occur during the month of June. income statement using June 2 Purchase radios on account from Air One for $2,400, terms 2/15, n/45. a perpetual inventory June 4 Pay freight charges related to the June 2 purchase from Air One, $400. system June 8 Return defective radios to Air One and receive credit, $600. (LO 5, 6) June 10 Pay Air One in full. June 11 Sell radios to customers on account, $5,000, that had a cost of $3,300. June 18 Receive payment on account from customers, $3,100. June 20 Purchase radios on account from Motion Unlimited for $3,300, terms 3/10, n/30. June 23 Sell radios to customers for cash, $4,800, that had a cost of $3,200. June 26 Return damaged radios to Motion Unlimited and receive credit of $300. June 28 Pay Motion Unlimited in full. Required: 1. Assuming that Chow Company uses a perpetual inventory system, record transactions using the following account titles: Cash, Accounts Receivable, Inventory, Accounts Payable, Sales Revenue, and Cost of Goods Sold. 2. Prepare the top section of the multiple-step income statement through gross profit for the month of June.

8 Report inventory using lower-of-cost-ormarket (LO 7) P6-4C A home improvement store carries the following items: Cost per Unit Market (replacement cost) per unit Inventory Items Quantity Hammers 110 $ 6.00 $ 7.00 Saws Screwdrivers Drills gallon paint cans Paint brushers Lower-of- Cost-or- Market Required: 1. Compute the total cost of inventory. 2. Determine whether each inventory item would be reported at cost or market. Multiply the quantity of each inventory item by the appropriate cost or market amount and place the total in the Lower-of-Cost-or-Market column. Then determine the total of that column. 3. Compare your answers in Requirement 1 and Requirement 2 and then prepare any necessary adjustment to write down inventory from cost to market value. 4. Discuss the financial statement effects of using lower-of-cost-or-market to report inventory.