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BE$6-1$ Peosta Company identifies the following items for possible inclusion in the taking

of a physical inventory. Indicate whether each item should be included or excluded from

the inventory taking.

$($a$)$ Goods shipped on consignment by Peosta to another company.

$($b$)$ Goods in transit from a supplier shipped FOB destination.

$($c$)$ Goods sold but being held for customer pickup.

$($d$)$ Goods held on consignment from another company.

BE$6-2$ Stallman Company took a physical inventory on December $31$ and determined that

goods costing $$200,000$ were on hand. Not included in the physical count were $$25,000$ of

goods purchased from Pelzer Corporation, FOB shipping point, and $$22,000$ of goods sold to

Alvarez Company for $$30,000,$ FOB destination. Both the Pelzer purchase and the Alvarez sale

were in transit at year$-$end. What amount should Stallman report as its December $31$ inventory?

BE$6-3$ In its first month of operations, Weatherall Company made three purchases of

merchandise in the following sequence: $(1)300$ units at $$6,(2)400$ units at $$7,$ and $(3)200$

units at $$8.$ Assuming there are $380$ units on hand, compute the cost of the ending inventory

under the $($a$)$ FIFO method and $($b$)$ LIFO method. Weatherall uses a periodic inventory system.

BE$6-4$ Data for Weatherall Company are presented in BE$6-3.$ Compute the cost of the ending

inventory under the average$-$cost method, assuming there are $380$ units on hand.

BE$6-5$ The management of Mastronardo Corp. is considering the effects of inventory$-$

costing methods on its financial statements and its income tax expense. Assuming that the

price the company pays for inventory is increasing, which method will:

$($a$)$ Provide the highest net income?

$($b$)$ Provide the highest ending inventory?

$($c$)$ Result in the lowest income tax expense?

$($d$)$ Result in the most stable earnings over a number of years?

BE$6-6$ Larkin Company reports net income of $$90,000$ in $2017.$ However, ending inven$-$

tory was understated $$7,000.$ What is the correct net income for $2017?$ What effect, if any,

will this error have on total assets as reported in the balance sheet at December $31,2017?$

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