602 Chapter 15 Payroll and Inventory
b. Calculate the value of the fl our inventory at the end of the month, using LIFO.
- Smith’s County Line Heating Supply purchased 10,000 gallons of heating oil for $18,825 from one supplier. The next
day the company bought an additional 14,000 gallons from another supplier for $24,360. The company already had
8,250 gallons in inventory at a cost of $12,350 when it made these purchases. It did not make any sales in the time
between the two purchases.
a. Calculate the value (at cost) of the company’s heating oil inventory immediately after these purchases,
using LIFO.
b. Suppose that the company sold 16,000 gallons of heating oil from this inventory. Calculate the value (at cost) of
the remaining inventory, using LIFO.
c. Suppose that the company then purchased 20,000 additional gallons of heating oil for $38,953. Calculate the
value (at cost) of the company’s heating oil inventory after this purchase, using LIFO.
d. Suppose that the company sells 18,000 gallons from this inventory. Calculate the value (at cost) of the remaining
inventory, using LIFO. - The bookstore at Northeastern Pennsylvania Community College purchased 153 copies of a biology textbook at a cost
of $73.50 each. From enrollment fi gures, the bookstore realized that it did not have enough books, and so it rush-
ordered 80 additional copies at a cost of $98.35 each. This order arrived at the end of the fi rst week of classes, at
which time the bookstore had sold 120 copies of the book. At the end of the third week of classes, it had 27 copies of
the book left in stock.
a. Calculate the value (at cost) of the inventory of this book at the end of the fi rst week of classes, using LIFO.
b. Calculate the value (at cost) of the inventory of this book at the end of the third week of classes, using LIFO.
c. Calculate the average cost per book (i) at the end of the fi rst week and (ii) at the end of the third week of classes,
using LIFO.
D. Cost of Goods Sold
- Calculate the cost of the textbooks sold by Northeastern Pennsylvania Community College’s bookstore if the inventory
is valued, using:
a. average cost (see Exercise 7)
b. FIFO (see Exercise 13)
c. LIFO (see Exercise 19) - At the start of the quarter, Tokamak Home Generators had inventory valued at $75,925. During the quarter, the
company made purchases amounting to $135,926, and at the end of the quarter its inventory was valued at $91,592.
Find the cost of goods sold in the quarter.
E. Estimating Inventory Cost Based on Retail
- A small appliance store’s inventory, valued at retail, is worth $107,300. Typically, its cost of goods sold is 62% of retail.
Estimate the inventory value at cost. - An auto dealership has inventory of $18,735,926 valued at list price. The dealer’s actual cost is 91% of list. Estimate
the inventory value at cost.