1. Valuation of Inventory
Section 8.4
Valuation of Inventory

2. Average Inventory
Sum of inventories divided by # of items in inventory
Inventory on Sept 1 was $76,822 and on Sept 30 it was $43,280. Find the average inventory.

3. Stock Turnover Turnover = Retail Sales_____
at retail Avg. Inventory at retail
Turnover = Cost of goods sold___
at cost Avg. Inventory at cost

4. In July, Painters Supply has an average retail inventory of $26,528 and retail sales of $183,308. Find the stock turnover at retail.
If the cost of goods sold by Painters Supply (above) was $150,348 and the average inventory at cost was $21,820, find the stock turnover at cost.

5. Inventory value using Weighted Average method
Find the average cost of a single item.
Multiply each # of items by the price.
Add those products
Divide by the total # of items
Multiply that average cost by the number of items remaining in inventory.

6. Olympic Sports made the following purchases
Olympic Sports made the following purchases. Find the inventory if there are 85 bicycles at the end of the year.
# of bicycles
Cost each
Beginning 20
$115
February 30
$95
April 50
$100
June 40
$110
August 80
$105
November 60
$130

7. FIFO = First In, First Out
Assumes a natural flow of goods. The items at the end of the year were the last items to arrive.
Use FIFO method to find the inventory value of the 85 bicycles from Olympic Sports.

8. LIFO = Last In, First Out
Assumes the opposite flow of good fro FIFO. The items left at the end of the year were from the first to arrive.
Use LIFO method to find the inventory value of the 85 bicycles from Olympic Sports.

9. Estimate Inventory ~Retail Method
The cost of goods available for sale is found as a % of the retail value of goods available for sale.
Then, % is multiplied by the retail value of inventory at the end of the period.
This gives an estimate of the inventory at cost.

10. At the end of June, Solar Solutions had an inventory of $87,500 at cost and $125,000 at retail. During the next 3 months, there were purchases of $103,200 at cost, $147,600 at retail, and net sales were $185,000. Use the retail method to estimate the value of inventory at cost at the end of September.