ACC 304 Week 1 Homework Chapter 8

IFRS Multiple Choice Question 01

Under IFRS, an entity should initially recognize inventory when
o
o
o
o

it has control of the inventory

it expects it ot provide future economic benefits
the cost of the inventory can be reliably measured
All of these choices are correct

IFRS Multiple Choice Question 02

With respect to accounting for inventories, which of the following is a difference that exists for
IFRS, as opposed to U.S., GAAP?
o The FIFO method of inventories is prohibited.
o The specific identification method of inventories is only allowed when goods are
interchangeable
o The weighted average method of inventories is prohibited.
o There is required recognition of certain development costs.

IFRS Multiple Choice Question 03

Under IFRS, which of the following would be included in the cost of inventories?
o
o
o
o

Abnormal waste materials

All of these would be included in the cost of inventories
Selling costs
Product specific designer costs

IFRS Multiple Choice Question 04

Which of the following best describes the IFRS requirement for applying the same cost formula
to all inventories?
o
o
o
o

When they are purchased from the same geographic region.

When they are purchased from different suppliers.
When they sell for the same price.
When they are similar in nature or use.

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ACC 304 Week 1 Homework Chapter 8

IFRS Multiple Choice Question 05
Under IFRS, inventories are classified as
o
o
o
o

noncurrent assets
current assets
stockholders equity
current liabilities

Brief Exercise 8-2

Matlock Company uses a perpetual inventory system. Its beginning inventory consists of 70 units
that cost $48 each. During June, (1) the company purchased 211 units at $48 each, (2)
returned 8 units for credit, and (3) sold 176 units at $70 each.
Journalize the June transactions. (If no entry is required, select "No entry" for the account
titles and enter 0 for the amounts. Credit account titles are automatically indented when
amount is entered. Do not indent manually.)
No.
(1)

Account Titles and Explanation

Inventory
Accounts Payable
(2)
Finished Goods Inventory
Purchase Returns and Allowances
(3)
Accounts Receivable
Sales Revenue
(To record sales)
Cost of Goods Sold
Inventory
(To record cost of goods sold)

Debit
10,128

Credit
10,128

384
384
12,320
12,320
8,448
8,448

Brief Exercise 8-5

Amsterdam Company uses a periodic inventory system. For April, when the company
sold 550 units, the following information is available.

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ACC 304 Week 1 Homework Chapter 8

(a) Calculate weighted average cost per unit. (Round answer to 2 decimal places, e.g. 2.76.)
Weighted average cost per unit $ 15.63
(b) Compute the April 30 inventory and the April cost of goods sold using the average-cost
method. (Round answers to 0 decimal places, e.g. 2,760.)
Ending inventory
Cost of goods sold

$ 6,877
$ 8,597

Brief Exercise 8-9

Arna, Inc. uses the dollar-value LIFO method of computing its inventory. Data for the past 3
years follow.

Compute the value of the 2014 and 2015 inventories using the dollar-value LIFO method.
Inventory under LIFO

2014
$ 21,136

2015
$ 21,517

Exercise 8-5
Craig Company asks you to review its December 31, 2014, inventory values and prepare the
necessary adjustments to the books. The following information is given to you.
1
.
2
.

Craig uses the periodic method of recording inventory. A physical count reveals $348,107 of
inventory on hand at December 31, 2014.
Not included in the physical count of inventory is $19,888 of merchandise purchased on
December 15 from Browser. This merchandise was shipped f.o.b. shipping point on
December 29 and arrived in January. The invoice arrived and was recorded on December 31.
3 Included in inventory is merchandise sold to Champy on December 30, f.o.b. destination.
. This merchandise was shipped after it was counted. The invoice was prepared and recorded
as a sale on account for $18,970 on December 31. The merchandise cost $10,893, and
Champy received it on January 3.
4 Included in inventory was merchandise received from Dudley on December 31 with an
. invoice price of $23,164. The merchandise was shipped f.o.b. destination. The invoice, which
has not yet arrived, has not been recorded.
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ACC 304 Week 1 Homework Chapter 8

5 Not included in inventory is $12,656 of merchandise purchased from Glowser Industries.
. This merchandise was received on December 31 after the inventory had been counted. The
invoice was received and recorded on December 30.
6 Included in inventory was $15,469 of inventory held by Craig on consignment from Jackel
. Industries.
7 Included in inventory is merchandise sold to Kemp f.o.b. shipping point. This merchandise
. was shipped after it was counted. The invoice was prepared and recorded as a sale for
$28,010 on December 31. The cost of this merchandise was $15,591, and Kemp received the
merchandise on January 5.
8 Excluded from inventory was a carton labeled Please accept for credit. This carton contains
. merchandise costing $2,223 which had been sold to a customer for $3,853. No entry had been
made to the books to reflect the return, but none of the returned merchandise seemed
damaged.
(a) Determine the proper inventory balance for Craig Company at December 31, 2014.
Inventory balance as on December 31, 2014 $ 364,137
(b) Prepare any correcting entries to adjust inventory to its proper amount at December 31, 2014.
Assume the books have not been closed. (If no entry is required, select No entry for the
account titles and enter 0 for the amounts. Credit account titles are automatically indented when
amount is entered. Do not indent manually.)
No.
1.
2.
3.
4.
5.
6.
7.
8.

Account Titles and Explanation

No Entry
No Entry
No Entry
No Entry
Sales Revenue
Accounts Receivable
Purchases
Accounts Payable
No Entry
No Entry
No Entry
No Entry
No Entry
No Entry
Sales Returns and Allowances
Accounts Receivable

Debit
0

Credit
0

0
0
18,970
18,970
23,164
23,164
0
0
0
0
0
0
3,853
3,853

Exercise 8-12
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ACC 304 Week 1 Homework Chapter 8

The net income per books of Linda Patrick Company was determined without knowledge of the
errors indicated below.

Prepare a worksheet to show the adjusted net income figure for each of the 6 years after taking
into account the inventory errors.

Exercise 8-25
Presented below is information related to Dino Radja Company.

Compute the ending inventory for Dino Radja Company for 2011 through 2016 using the dollarvalue LIFO method.
2011
2012

Ending Inventory
$
63,400
$
81,752
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ACC 304 Week 1 Homework Chapter 8

2013
2014
2015
2016

$
$
$
$

114,653
160,589
184,224
263,544

Problem 8-3
Some of the transactions of Torres Company during August are listed below. Torres uses the
periodic inventory method.
August 10
13
15
25
28

Purchased merchandise on account, $36,800, terms 2/10, n/30.

Returned part of the purchase of August 10, $1,800, and received credit on account.
Purchased merchandise on account, $41,100, terms 1/10, n/60.
Purchased merchandise on account, $48,000, terms 2/10, n/30.
Paid invoice of August 15 in full.

(a1) Assuming that purchases are recorded at gross amounts and that discounts are to be recorded
when taken:
Prepare general journal entries to record the transactions. (If no entry is required, select "No
entry" for the account titles and enter 0 for the amounts. Credit account titles are
automatically indented when amount is entered. Do not indent manually.)
Date
Aug. 10
Aug. 13
Aug. 15
Aug. 25
Aug. 28

Account Titles and Explanation

Purchases
Accounts Payable
Accounts Payable
Purchase Returns and Allowances
Purchases
Accounts Payable
Purchases
Accounts Payable
Accounts Payable
Cash

Debit
36,800

Credit
36,800

1,800
1,800
41,100
41,100
48,000
48,000
33,120
33,120

(b1) Assuming that purchases are recorded at net amounts and that discounts lost are treated as
financial expenses:
Prepare general journal entries to enter the transactions. (If no entry is required, select "No
entry" for the account titles and enter 0 for the amounts. Credit account titles are
automatically indented when amount is entered. Do not indent manually.)
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ACC 304 Week 1 Homework Chapter 8

Date
Aug. 10
Aug. 13
Aug. 15
Aug. 25
Aug. 28

Account Titles and Explanation

Purchases
Accounts Payable
Accounts Payable
Purchase Returns and Allowances
Purchases
Accounts Payable
Purchases
Accounts Payable
Accounts Payable
Purchase Discounts Lost
Cash

Debit
36,064

Credit
36,064

34,264
34,264
40,689
40,689
47,040
47,040
40,689
411
41,100

(b2) Assuming that purchases are recorded at net amounts and that discounts lost are treated as
financial expenses:
Prepare the adjusting entry necessary on August 31 if financial statements are to be prepared at
that time. (If no entry is required, select "No entry" for the account titles and enter 0 for the
amounts. Credit account titles are automatically indented when amount is entered. Do not
indent manually.)
Account Titles and Explanation
Purchase Discounts Lost
Accounts Payable

Debit
411

Credit
411

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