Copyright © 2008, The McGraw-Hill Companies, Inc.
F. Cost Basis- Sandra recently sold 500 shares of stock for $3,350. She had bought stock of this company in the following lots:
Lot Number of Shares Cost1 200 $1,000
2 200 $1,450
3 300 $4,900Calculate her cost basis for the shares she sold, and her capital gain (or loss) on the sale.- Suppose that you sold 500 shares of stock in Elmira Glassworks for $10,000. Before this sale, you had been purchasing
shares of this company’s stock for some time. Your holdings of this stock were obtained from the following purchases:
Lot Number of Shares Cost1 250 $11,700
2 150 $3,000
3 300 $2,400
4 500 $5,500Calculate the cost basis of the shares you sold and your capital gain (or loss) on this sale.G. Grab Bag- A sporting goods store began selling a new model of tennis racket during the second quarter of the year. Its inventory
of this tennis racket is shown in the table below:
Lot Number of Rackets CostNumber in Stock
after ShipmentBeginning inventory 10 $825 10
Shipment 15 $1,025 18
Ending inventory n/a n/a 7Calculate the value of the ending inventory based on:
a. The average cost method
b. FIFO
c. LIFO- This question is a continuation of Exercise 26. For the sporting goods store in Exercise 26, calculate the cost of tennis
rackets sold if the inventory is valued by:
a. The average cost method
b. FIFO
c. LIFO
H. Additional Exercises- If prices are rising and you want to make your company’s profi ts appear as small as possible, would you prefer to use
average cost, LIFO, or FIFO to value your inventory? - Rework Exercise 26, using periodic valuation instead of perpetual.
Exercises 15.2 603