Student Name: Instructor Class: McGraw-Hill/Irwin Problem 09-01 THE DECKER COMPANY Inventory Requirement 1: (1) (2) Ceiling

(3) Floor Designated Market Value [Middle value of (1), (2) & (3)] $ 12,000 8,800 2,160 800 6,630 $ 30,390
Correct!

(4)

(5)

Product A B C D E

Units 1,000 800 600 200 600

RC 12,000 8,800 1,200 800 7,200

NRV 13,600 12,240 4,080 1,020 6,630

NRV-NP $ 7,200 6,480 2,160 540 3,510 Totals

Cost 10,000 12,000 1,800 1,400 8,400 33,600

Inventory Value [Lower of (4) and (5)] $ 10,000 8,800 1,800 800 6,630 $ 28,030
Correct!

Inventory carrying value: Requirement 2: Inventory carrying value: Loss from inventory write-down:

28,030

- Correct!

$ $

30,390 3,210

- Correct!

Given Data P09-01: THE DECKER COMPANY Unit Selling Price $16 18 8 6 13 15% 40%

Product A B C D E

Quantity 1,000 800 600 200 600

Unit Cost $10 15 3 7 14

Unit RC $12 11 2 4 12

Sales commission Normal profit as percentage of selling price

Student Name: Instructor Class: McGraw-Hill/Irwin Problem 09-05 Requirement 1: ALQUIST COMPANY Conventional Retail Method Cost 100,000 1,387,500 10,000 Retail 150,000 2,000,000 300,000 2,450,000 61.12% (150,000) 2,300,000 (15,000) 1,750,000 250,000

Beginning inventory Plus: Purchases Freight-in Plus: Net markups Cost-to-retail percentage: Less: Net markdowns Goods available for sale Less: Normal shrinkage Sales: Sales to customers Sales to employees Employee discounts Estimated ending inventory at retail Estimated ending inventory at cost Estimated cost of goods sold

1,497,500

(2,000,000) (62,500) 222,500 (135,992) $ 1,361,508

- Correct!

Requirement 2: ALQUIST COMPANY LIFO Retail Method Cost 100,000 1,387,500 10,000 Retail 150,000 2,000,000 300,000 (150,000) 2,150,000 2,300,000

Beginning inventory Plus: Purchases Freight-in Plus: Net markups Less: Net markdowns Goods available for sale (excluding beg. inv.) Goods available for sale (including beg. inv.) Cost to retail percentage: Less: Normal shrinkage Sales: Sales to customers Sales to employees Employee discounts Estimated ending inventory at retail Estimated ending inventory at cost: Beginning inventory Current period's layer Total Estimated cost of goods sold

1,397,500 1,497,500 65%

(15,000) $ 1,750,000 250,000

(2,000,000) (62,500) 222,500 Cost 100,000 47,125 147,125

- Correct!

$ $

Retail 150,000 72,500 222,500

$ $

(147,125) $ 1,350,375

- Correct!

Given Data P09-05: ALQUIST COMPANY 2011 operations information: Beginning inventory cost, 1/1/2011 Beginning inventory retail value, 1/1/2011 2011 Purchases cost 2011 Purchases retail value Incoming freight costs Outgoing freight costs Net additional. markups Net markdowns Shrinkage estimate Employee discount Employee sales Customer sales $ 100,000 $ 150,000 $ 1,387,500 $ 2,000,000 $ 10,000 $ 25,000 $ 300,000 $ 150,000 $ 15,000 20% $ 250,000 $ 1,750,000

Student Name: Instructor Class: McGraw-Hill/Irwin Problem 09-06 Requirement 1: GRAND DEPARTMENT STORE, INC. Conventional Retail Method Cost 20,000 $ 100,151 5,100 (2,100) Retail 30,000 146,495 (2,800) 2,235 175,930

Beginning inventory Plus: Purchases Freight-in Less: Purchase returns Plus: Net markups Cost-to-retail percentage: Less: Net markdowns Goods available for sale Less: Normal spoilage Net sales Estimated ending inventory at retail Estimated ending inventory at cost 70.00%

123,151
Correct!

(800) 175,130 (4,500) (135,730) 34,900

$ $ 24,430
Correct!

Requirement 2: The difference between the inventory estimate per retail method and the amount per the physical count may be due to: 1. Theft losses.

2. Spoilage or breakage above normal.

3. Differences in cost-to-retail percentage for purchases during the month, beginning inventory, and ending inventory. 4. Markups on goods available for sale inconsistent between cost of goods sold and ending inventory.

5. A wide variety of merchandise with varying cost-to-retail percentages.

6. Incorrect reporting of markdowns, additional markups or cancellations.

Given Data P09-06: GRAND DEPARTMENT STORE, INC. October, 2011 operations information: Beginning inventory at cost, 10/1/2011 Beginning inventory at retail, 10/1/2011 Purchases at cost Purchases at retail Freight-in Purchase returns at cost Purchase returns at retail Additional. markups Markup cancellations Net markdowns Normal spoilage and breakage Sales $ $ $ $ $ $ $ $ $ $ $ $ 20,000 30,000 100,151 146,495 5,100 2,100 2,800 2,500 265 800 4,500 135,730

Student Name: Instructor Class: McGraw-Hill/Irwin Problem 09-10 Requirement 1: RALEIGH DEPARTMENT STORE Conventional Retail Method Cost 27,500 $ 282,000 26,500 (6,500) (5,000) Retail 45,000 490,000 (10,000) 25,000 550,000 59% (10,000) 540,000 (487,000) (3,000) 50,000
Correct!

Beginning inventory Plus: Purchases Freight-in Less: Purchase returns Purchase discounts Plus: Net markups Cost-to-retail percentage: Less: Net markdowns Goods available for sale Less: Net sales Employee discounts Estimated ending inventory at retail Estimated ending inventory at cost

324,500

$ $ 29,500
Correct!

Requirement 2: RALEIGH DEPARTMENT STORE LIFO Retail Method Cost 27,500 $ 282,000 26,500 (6,500) (5,000) Retail 45,000 490,000 (10,000) 25,000 (10,000) 495,000 540,000

Beginning inventory Plus: Purchases Freight-in Less: Purchase returns Purchase discounts Plus: Net markups Less: Net markdowns Goods available for sale (excl. beg. inv.) Goods available for sale (incl. beg. inv.) Cost-to-retail percentage Less: Net sales Employee discounts Less Net Sales Estimated ending inventory at retail Estimated ending inventory at cost: Beginning inventory Current period's layer Total $ $

$ 60%

297,000 324,500

$ Retail 45,000 5,000 50,000

(487,000) (3,000) 50,000

$ $

Cost 27,500 3,000 30,500

Student Name: Instructor Class: McGraw-Hill/Irwin Problem 09-10 Requirement 3: RALEIGH DEPARTMENT STORE Dollar-Value LIFO Retail Method Ending Inventory at Base Year Retail Prices $ 55,000 Inventory Inventory Layers Layers at Base Year Converted To Retail Prices Cost $ 30,500 3,162 33,662
Correct!

Ending Inventory at Year-end Retail Prices 2010 $ 56,100

50,000 $ 5,000 Total ending inventory at dollar-value LIFO retail cost $

2011 48,300

$ 46,000 $ 46,000 $ Total ending inventory at dollar-value LIFO retail cost $

28,060 28,060
Correct!

Given Data P09-10: RALEIGH DEPARTMENT STORE 1/1/09 inventory retail value 1/1/09 inventory cost Transactions during 2009: Gross purchases Purchase returns Purchase discounts Gross sales Sales returns Employee discounts Freight-in Net markups Net markdowns 12/31/10 inventory retail value Cost-to-retail percentage under LIFO retail method Appropriate price index of the January 1, 2010 price level 12/31/11 inventory retail value Cost-to-retail percentage under LIFO retail method Appropriate price index of the January 1, 2010 price level $ Cost 282,000 6,500 5,000 $ Retail 490,000 10,000 492,000 5,000 3,000 26,500 25,000 10,000 $ 56,100 62% 102% 48,300 61% 105% $ $ 45,000 27,500