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Exercise #1:

SBA Inc. use wood (raw material) for its production line #2. Its beginning inventory on January 1, 2020, is 100 units purchased at $320.

SBA Inc. has purchased during 2020 the following items: SBA Inc. has sold during 2020 the following items:

March 1st

50 units at $347

April 1

July 1st

200 units at $343

September 1

100 units

230 units

October st

100 units at $346

Required:

1. Compute cost of goods sold assuming the use of the weighted average costing method. (20 points)

2. Compute the dollar amount of ending inventory assuming the FIFO costing method. (20 points)

Exercise #2:

Sidney began the year with $130,000 in merchandise inventory and ended the year with $190,000. Sales and cost of goods sold for the year were $900,000 and $640,000, respectively.

1. Compute Sidney's inventory turnover ratio. (10 points)

2. Compute the number of days' sales in inventory (10 points)

3. Compute the dollar amount of ending inventory assuming the LIFO costing method. (20 points).

4. Assume a 40% tax rate and a unit selling price of $350. Compute the amount of taxes saved if Stewart uses the LIFO method rather than the FIFO method. (20 bonus points)

Exercise #3:

BA Corp. ended the year with balances in Accounts Receivable of $1,800,000 and in Allowance for Doubtful Accounts of $70,000 (credit balance before adjustment). Net sales for the year amounted to $950,000. Prepare the necessary journal entry on its books at the end of the year assuming the following:

Required:

1. Estimated percentage of net sales uncollectible is 2%. (10 points).

Estimated percentage of year-end accounts receivable uncollectible is 6%. (10 points)

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