1. Exercise 1
E The following information relates to the Jimmy Johnson Company :
Date Ending inventory Price/Index
Dec 31, $ 70,
Dec 31, $ 90,
Dec 31, $ 95,
Dec 31, $ 105,
Dec 31, $ 100,
Instructions :
Use the dollar value LIFO method to compute the ending inventory for Johnson Co 2000 through 2004.

2. Answer of Exercise 1
Date Current Price Index Base-Year $ Change from Prior Year
Dec. 31, $ 70, $ 70, —
Dec. 31, $ 90, $ 86, $ + 16,000
Dec. 31, $ 95, $ 82, $ (4,000)
Dec. 31, $ 105, $ 88, $ + 6,000
Dec. 31, $ 100, $ 80, $ (8,000)
Ending Inventory—Dollar-value LIFO:
Dec. 31, $ 70,000
Dec. 31, $ 70,000 @ = $ 70,000
$ 16,000 @ = $ 16,800
$ 86,800
Dec. 31, $ 70,000 @ = $ 70,000
$ 12,000 @ = $ 12,600
$ 82,600
Dec. 31, $ 1.00 = $ 70,000
$ 1.05 = $ 12,600
$ 1.20 = $ 7,200
$ 89,800
Dec. 31, $ 1.00 = $ 70,000
$ 10,000 @ 1.05 = $ 10,500
$ 80,500

3. Exercise 2
P.8.6. Iowa Co is a multi product firm. Presented below is information concerning one of its products, the Hawkeye.
Date Transaction Quantity Price/Cost
Jan Beginning inventory , $ 12
Feb Purchase , $ 18
Feb Sale , $ 30
April Purchase , $ 23
Nov Sale , $ 33
Instructions :
Compute Cost of Goods Sold, assuming Iowa uses :
Periodic system, FIFO cost flow
Perpetual system, FIFO cost flow
Periodic system, LIFO cost flow
Perpetual system, LIFO cost flow
Periodic system, weighted average cost flow
Perpetual system, moving average cost flow

4. Answer of Exercise 2 (a) Beginning inventory 1,000
  Purchases (2, ,000) ,000
  Units available for sale ,000
  Sales (2, ,000) ,500
  Goods on hand ,500
Periodic FIFO
1,000 X $ 12 = $ 12,000
2,000 X $ 18 = $ 36,000
1,500 X $ 23 = $ 34,500
  4, $ 82,500

5. Answer of Exercise 2 (c) Periodic LIFO
(b) Perpetual FIFO same as periodic :$ 82,500
(c) Periodic LIFO
3,000 X $ 23 = $ 69,000
1,500 X $ 18 = $ 27,000
4, $ 96,000

6. Answer of Exercise 2 (d) Perpetual LIFO Date Purchased Sold Balance
Jan 1
1,000 x $ 12 = $ 12,000
Feb 4
2,000 x $ 18 = $ 36,000
(1,000 x $ 12) +
(2,000 x $ 18) = $ 48,000
Feb 20
(2,000 x $ 18) +
(500 x $ 12) = $ 42,000
500 x $ 12 = $ 6,000
Apr 2
3,000 x $ 23 = $ 69,000
(500 x $ 12) +
(3,000 x $ 23) = $ 75,000
Nov 4
2,000 x $ 23 = $ 46,000
(1,000 x $ 23) = $ 29,000
$ 88,000

7. Answer of Exercise 2 1,000 X $ 12 = $ 12,000 2,000 X $ 18 = $ 36,000
(e) Periodic weighted-average
  1,000 X $ 12 = $ 12,000
  2,000 X $ 18 = $ 36,000
  3,000 X $ 23 = $ 69,000
$ 117,000
$ 117,000 : 6,000 = $ 19.50
4,500 X $ = $ 87,750

8. Answer of Exercise 2 (f) Perpetual moving average
Date
Purchased
Sold
Balance
Jan 1
1,000 x $ 12 = $ 12,000
Feb 4
2,000 x $ 18 = $ 36,000
3,000 x $ 16 = $ 48,000
Feb 20
2,500 x $ 16 = $40,000
500 x $ 16 = $ 8,000
Apr 2
3,000 x $ 23 = $ 69,000
3,500 x $ 22*= $ 77,000
Nov 4
2,000 x $ 22 = $ 44,000
1,500 x $ 22 = $ 33,000
$ 84,000
*/ x $ 16 = $ 8,000
3,000 x $ 23 = $ 69,000
3, $ 77,000
$ 77,000 : 3,500 = $ 22