Fundamentals Of Financial Accounting
6th Edition
ISBN: 9781259864230
Author: PHILLIPS, Fred, Libby, Robert, Patricia A.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 7, Problem 17ME
Interpreting LCM Financial Statement Note Disclosure
Zumiez Inc. is a leading action sports retailer, focusing on skateboarding, snowboarding, surfing, and BMX, selling some of its merchandise under the Blue Tomato brand. The company’s financial statement notes reported that “Merchandise inventories may include items that have been written down to our best estimate of their net realizable value. Our decisions to write-down our merchandise inventories are based on their current rate of sale, the age of the inventory, the profitability of the inventory and other factors.” What ratios and financial measure(s) discussed in this chapter is the company likely using to monitor …
- a. “… the current rate of sale”?
- b. “… the age of the inventory”?
- c. “… the profitability of the inventory”?
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Required information
[The following information applies to the questions displayed below.]
Hemming Company reported the following current-year purchases and sales for its only product.
Date
Date
January 1
January 10
March 14
March 15
July 30
October 5
October 26
a) Cost of Goods Sold using Specific Identification
Available for Sale
January 1
March 14
July 30
October 26
Less:
Equals:
Activities
Beginning inventory
Sales
Purchase
Sales
Purchase
Sales
Purchase
Totals
Activity
Beginning Inventory
Purchase
Purchase
Purchase
# of
units
b) Gross Margin using Specific Identification
Sales
200
350
Hemming uses a periodic inventory system. Ending inventory consists of 45 units from the March 14 purchase, 75 units from the July
30 purchase, and all 100 units from the October 26 purchase. Using the specific identification method, calculate the following.
450
100
1,100
$ 35,200✔
14,075✔
$ 21,125
Cost
Per
Unit
$
450 units
100 units
1,100 units
10.00
$
15.00
$
Units Acquired at Cost
200 units @ $10…
!
Required information
[The following information applies to the questions displayed below.]
Hemming Company reported the following current-year purchases and sales for its only product.
Activities
Beginning inventory
Date
January 1
January 10
March 14
Sales
March 15
July 30
October 5
October 26
Purchase
Sales
Purchase
Sales
Purchase
Totals
a) Cost of Goods Sold using Specific Identification
Available for Sale
Date
January 11
March 14
July 30
October 26
Less:
Equals:
Activity
Beginning Inventory
Purchase
Purchase
Purchase
b) Gross Margin using Specific Identification
# of units
Units Acquired at Cost
@ $11.00 -
@$16.00
225 units
225
340
425
125
1,115
340 units
425 units
125 units
1,115 units
Ending inventory consists of 65 units from the March 14 purchase, 80 units from the July 30 purchase, and all 125 units from the
October 26 purchase. Using the specific identification method, calculate the following.
Cost Per
Unit
@$21.00 -
Ending inventory consists of 65 units from the March 14…
Required information
[The following information applies to the questions displayed below.]
Hemming Company reported the following current-year purchases and sales for its only product.
Activities
Beginning inventory
Sales.
Purchase
Sales
Purchase
Sales
Purchase
Totals
Date
January 1
January 10
March 14
March 15
July 30
October 5
October 26
a) Cost of Goods Sold using Specific Identification
Available for Sale
Date
January 1
March 14
July 30
October 26
Less:
Equals:
Activity
Beginning Inventory
Purchase
Purchase
Purchase
b) Gross Margin using Specific Identification
# of units
260
420
460
160
1,300
Units Acquired at Cost
@$12.40 =
@$17.40 =
260 units.
420 units
460 units
160 units
1,300 units
Cost
Per
Unit
$ 12.40
$17.40
$22.40
$ 27.40
3
@ $22.40
# of
units
sold
@$27.40
Ending inventory consists of 45 units from the March 14 purchase, 75 units from the July 30 purchase, and all 160 units from the
October 26 purchase. Using the specific identification method, calculate the following.
=
0…
Chapter 7 Solutions
Fundamentals Of Financial Accounting
Ch. 7 - What are three goals of inventory management?Ch. 7 - Describe the specific types of inventory reported...Ch. 7 - The chapter discussed four inventory costing...Ch. 7 - Which inventory cost flow method is most similar...Ch. 7 - Where possible, the inventory costing method...Ch. 7 - Contrast the effects of LIFO versus FIFO on ending...Ch. 7 - Contrast the income statement effect of LIFO...Ch. 7 - Several managers in your company are experiencing...Ch. 7 - Explain briefly the application of the LCM rule to...Ch. 7 - Prob. 10Q
Ch. 7 - You work for a made-to-order clothing company,...Ch. 7 - Prob. 12QCh. 7 - (Supplement 7B) Explain why an error in ending...Ch. 7 - Which of the following statements are true...Ch. 7 - The inventory costing method selected by a company...Ch. 7 - Which of the following is not a name for a...Ch. 7 - Which of the following correctly expresses the...Ch. 7 - A New York bridal dress designer that makes...Ch. 7 - If costs are rising, which of the following will...Ch. 7 - Which inventory method provides a better matching...Ch. 7 - Which of the following regarding the lower of cost...Ch. 7 - An increasing inventory turnover ratio a....Ch. 7 - In which of the following situations is an LCM/NRV...Ch. 7 - Matching Inventory Items to Type of Business Match...Ch. 7 - Reporting Goods in Transit Abercrombie Fitch Co....Ch. 7 - Prob. 3MECh. 7 - Reporting Inventory-Related Accounts in the...Ch. 7 - Matching Financial Statement Effects to Inventory...Ch. 7 - Matching Inventory Costing Method Choices to...Ch. 7 - Calculating Cost of Goods Available for Sale,...Ch. 7 - Calculating Cost of Goods Available for Sale,...Ch. 7 - Calculating Cost of Goods Available for Sale,...Ch. 7 - Prob. 10MECh. 7 - Calculating Cost of Goods Available for Sale, Cost...Ch. 7 - Calculating Cost of Goods Available for Sale, Cost...Ch. 7 - Calculating Cost of Goods Available for Sale, Cost...Ch. 7 - Reporting Inventory under Lower of Cost or...Ch. 7 - Preparing the Journal Entry to Record Lower of...Ch. 7 - Determining the Effects of Inventory Management...Ch. 7 - Interpreting LCM Financial Statement Note...Ch. 7 - Calculating the Inventory Turnover Ratio and Days...Ch. 7 - Prob. 19MECh. 7 - Prob. 20MECh. 7 - Prob. 21MECh. 7 - (Supplement 7A) Calculating Cost of Goods Sold and...Ch. 7 - (Supplement 7B) Determining the Financial...Ch. 7 - Prob. 24MECh. 7 - Reporting Goods in Transit and Consignment...Ch. 7 - Determining the Correct Inventory Balance Seemore...Ch. 7 - Determining the Correct Inventory Balance Seemore...Ch. 7 - Calculating Cost of Ending Inventory and Cost of...Ch. 7 - Calculating Cost of Ending Inventory and Cost of...Ch. 7 - Prob. 6ECh. 7 - Analyzing and Interpreting the Financial Statement...Ch. 7 - Evaluating the Effects of Inventory Methods on...Ch. 7 - Choosing LIFO versus FIFO When Costs Are Rising...Ch. 7 - Using FIFO for Multiproduct Inventory Transactions...Ch. 7 - Reporting Inventory at Lower of Cost or Market/Net...Ch. 7 - Reporting Inventory at Lower of Cost or Market/Net...Ch. 7 - Analyzing and Interpreting the Inventory Turnover...Ch. 7 - Analyzing and Interpreting the Effects of the...Ch. 7 - Prob. 15ECh. 7 - Analyzing and Interpreting the Financial Statement...Ch. 7 - Prob. 17ECh. 7 - Analyzing the Effects of Four Alternative...Ch. 7 - Evaluating the Income Statement and Income Tax...Ch. 7 - Calculating and Interpreting the Inventory...Ch. 7 - Prob. 4CPCh. 7 - (Supplement 7B) Analyzing and Interpreting the...Ch. 7 - Analyzing the Effects of Four Alternative...Ch. 7 - Evaluating the Income Statement and Income Tax...Ch. 7 - Prob. 3PACh. 7 - Prob. 4PACh. 7 - (Supplement 7B) Analyzing and Interpreting the...Ch. 7 - Prob. 1PBCh. 7 - Prob. 2PBCh. 7 - Prob. 3PBCh. 7 - Prob. 4PBCh. 7 - (Supplement 7B) Analyzing and Interpreting the...Ch. 7 - Prob. 1COPCh. 7 - (Supplement 7A) Recording Inventory Transactions,...Ch. 7 - (Supplement 7A) Recording Inventory Purchases,...Ch. 7 - (Supplement 7A) Recording Inventory Purchases,...Ch. 7 - Prob. 5COPCh. 7 - Prob. 6COPCh. 7 - Prob. 7COPCh. 7 - Prob. 8COPCh. 7 - Prob. 9COPCh. 7 - Prob. 10COPCh. 7 - Prob. 11COPCh. 7 - Prob. 12COPCh. 7 - Prob. 1SDCCh. 7 - Prob. 2SDCCh. 7 - Critical Thinking: Income Manipulation under the...Ch. 7 - Accounting for Changing Inventory Costs In...
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