Intermediate Accounting Ch 8 Essays

Intermediate Accounting Ch 8 Essays Intermediate Accounting Ch 8 Paper Intermediate Accounting Ch 8 Paper CHAPTER 8 Valuation of Inventories: A Cost-Basis Approach ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics 1. Inventory accounts; determining quantities, costs, and items to be included in inventory; the inventory equation; balance sheet disclosure. Perpetual vs. periodic. Recording of discounts. Inventory errors. Flow assumptions. 10, 11 7 12, 13, 16, 18, 20 4 5, 6, 7 Questions 1, 2, 3, 4, 5, 6, 8, 9 Brief Exercises 1, 3 Exercises 1, 2, 3, 4, 5, 6, 10 Problems 1, 2, 3 Concepts for Analysis 1, 2, 3, 5, 11 2. 3. 4. 5. 2 , 13, 14, 17 7, 8 2, 3, 4, 5, 10, 11, 12 13, 14, 15, 16, 17, 18, 19, 20, 21, 22 18 4, 5, 6 3 2 1, 4, 5, 6, 7 5, 6, 7, 8 4 6. 7. Inventory accounting changes. Dollar-value LIFO methods. 14, 15, 17, 18, 19 8, 9 7 1, 8, 9, 10, 11 6, 7, 10 8, 9 23, 24, 25, 26 8-1 ASSIGNMENT CLASSIFICATION TABLE (BY LEARNING OBJECTIVE) Learning Objectives 1. 2. 3. 4. 5. Identify major classifications of inventory. Distinguish between perpetual and periodic inventory systems. Identify the effects of inventory errors on the financial statements. Understand the items to include as inventory cost. Describe and compare the cost flow assumptions used to account for inventories. Explain the significance and use of a LIFO reserve. Understand the effect of LIFO liquidations. Explain the dollar-value LIFO method. Identify the major advantages and disadvantages of LIFO. Understand why companies select given inventory methods. 8, 9 22, 23, 24, 25, 26 1, 8, 9, 10, 11 Brief Exercises 1 2 4 1, 3 5, 6, 7 4, 9, 13, 16, 17, 18, 20 5, 10, 11, 12 1, 2, 3, 4, 5, 6, 7, 8 13, 14, 15, 16, 17, 18, 19, 20, 22 21 1, 2, 3 1, 4, 5, 6, 7 4, 5, 6 Exercises Problems 6. 7. 8. . 10. 8-2 ASSIGNMENT CHARACTERISTICS TABLE Level of Difficulty Moderate Moderate Simple Simple Moderate Simple Simple Simple Moderate Simple Simple Moderate Moderate Moderate Moderate Moderate Simple Simple Moderate Simple Moderate Moderate Simple Simple Moderate Moderate Moderate Moderate Simple Complex Complex Moderate Moderate Moderate Time (minutes) 15–20 10–15 10–15 10–15 15–20 10–20 10à ¢â‚¬â€œ15 20–25 15–25 10–15 10–15 15–20 15–20 20–25 15–20 15–20 10–15 15–20 15–20 10–15 10–15 25–30 5–10 15–20 20–25 15–20 30–40 25–35 20–25 40–55 40–55 25–35 30–40 30–40 Item E8-1 E8-2 E8-3 E8-4 E8-5 E8-6 E8-7 E8-8 E8-9 E8-10 E8-11 E8-12 E8-13 E8-14 E8-15 E8-16 E8-17 E8-18 E8-19 E8-20 E8-21 E8-22 E8-23 E8-24 E8-25 E8-26 P8-1 P8-2 P8-3 P8-4 P8-5 P8-6 P8-7 P8-8 Description Inventoriable costs. Inventoriable costs. Inventoriable costs. Inventoriable costs- perpetual. Inventoriable costs- error adjustments. Determining merchandise amounts- periodic. Purchases recorded net. Purchases recorded, gross method. Periodic versus perpetual entries. Inventory errors, periodic. Inventory errors. Inventory errors. FIFO and LIFO- periodic and perpetual. FIFO, LIFO and average cost determination. FIFO, LIFO, average cost inventory. Compute FIFO, LIFO, average cost- periodic. FIFO and LIFO; periodic and perpetual. FIFO and LIFO; income statement presentation. FIFO and LIFO effects. FIFO and LIFO- periodic. LIFO effect. Alternate inventory methods- comprehensive. Dollar-value LIFO. Dollar-value LIFO. Dollar-value LIFO. Dollar-value LIFO. Various inventory issues. Inventory adjustments. Purchases recorded gross and net. Compute FIFO, LIFO, and average cost- periodic and perpetual. Compute FIFO, LIFO, and average cost- periodic and perpetual. Compute FIFO, LIFO, and average cost- periodic and perpetual. Financial statement effects of FIFO and LIFO. Dollar-value LIFO. 8-3 ASSIGNMENT CHARACTERISTICS TABLE (Continued) Item P8-9 P8-10 P8-11 CA8-1 CA8-2 CA8-3 CA8-4 CA8-5 CA8-6 CA8-7 CA8-8 CA8-9 CA8-10 CA8-11 Description Internal indexes- dollar-value LIFO. Internal indexes- dollar-value LIFO. Dollar-value LIFO. Inventoriable costs. Inventoriable costs. Inventoriable costs. Accounting treatment of purchase discounts. General inventory issues. LIFO inventory advantages. Average cost, FIFO, and LIFO. LIFO application and advantages. Dollar-value LIFO issues. FIFO and LIFO. LIFO Choices- Ethical Issues Level of Difficulty Moderate Complex Moderate Moderate Moderate Moderate Simple Moderate Simple Simple Moderate Moderate Moderate Moderate Time (minutes) 25–35 30–35 40–50 15–20 15–25 25–35 15–25 20–25 15–20 15–20 25–30 25–30 30–35 20–25 8-4 ANSWERS TO QUESTIONS 1. In a retailing concern, inventory normally consists of only one category, that is the product awaiting resale. In a manufacturing enterprise, inventories consist of raw materials, work in process, and finished goods. Sometimes a manufacturing or factory supplies inventory account is also included. a) Inventories are unexpired costs and represent future benefits to the owner. A statement of financial position includes a listing of all unexpired costs (assets) at a specific point in time. Because inventories are assets owned at the specific point in time for which a statement of financ ial position is prepared, they must be included in order that the owners’ financial position will be presented fairly. (b) Beginning and ending inventories are included in the computation of net income only for the purpose of arriving at the cost of goods sold during the period of time covered by the statement. Goods included in the beginning inventory which are no longer on hand are expired costs to be matched against revenues earned during the period. Goods included in the ending inventory are unexpired costs to be carried forward to a future period, rather than expensed. 3. In a perpetual inventory system, data are available at any time on the quantity and dollar amount of each item of material or type of merchandise on hand. A physical inventory means that inventory is periodically counted (at least once a year) but that up-to-date records are not necessarily maintained. Discrepancies often occur between the physical count and the perpetual records because of clerical errors, theft, waste, misplacement of goods, etc. 4. No. Mariah Carey, Inc. should not report this amount on its balance sheet. As consignee, it does not own this merchandise and therefore it is inappropriate for it to recognize this merchandise as part of its inventory. Product financing arrangements are essentially off-balance-sheet financing devices. These arrangements make it appear that a company has sold its inventory or never taken title to it so they can keep loans off their balance sheet. A product financing arrangement should not be recorded as a sale. Rather, the inventory and related liability should be reported on the balance sheet. (a) (b) (c) (d) (e) (f) Inventory. Not shown, possibly in a note to the financial statements if material. Inventory. Inventory, separately disclosed as raw materials. Not shown, possibly a note to the financial statements. Inventory or manufacturing supplies. 2. 5. 6. 7. This omission would have no effect upon the net income for the year, since the purchases and the ending inventory are understated in the same amount. With respect to financial position, both the inventory and the accounts payable would be understated. Materiality would be a factor in determining whether an adjustment for this item should be made as omission of a large item would distort the amount of current assets and the amount of current liabilities. It, therefore, might influence the current ratio to a considerable extent. Cost, which has been defined generally as the price paid or consideration given to acquire an asset, is the primary basis for accounting for inventories. As applied to inventories, cost means the sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location. These applicable expenditures and charges include all acquisition and production costs but exclude all selling expenses and that portion of general and administrative expenses not clearly related to production. Freight charges applicable to the product are considered a cost of the goods. 8-5 8. Questions Chapter 8 (Continued) 9. By their nature, product costs â€Å"attach† to the inventory and are recorded in the inventory account. These costs are directly connected with the bringing of goods to the place of business of the buyer and converting such goods to a salable condition. Such charges would include freight charges on goods purchased, other direct costs of acquisition, and labor and other production costs incurred in processing the goods up to the time of sale. Period costs are not considered to be directly related to the acquisition or production of goods and therefore are not considered to be a part of inventories. Conceptually, these expenses are as much a cost of the product as the initial purchase price and related freight charges attached to the product. While selling expenses are generally considered as more directly related to the cost of goods sold than to the unsold inventory, in most cases, though, the costs, especially administrative expenses, are so unrelated or indirectly related to the immediate production process that any allocation is purely arbitrary. Interest costs are considered a cost of financing and are generally expensed as incurred, when related to getting inventories ready for sale. 10. Cash discounts (purchase discounts) should not be accounted for as financial income when payments are made. Income should be recognized when the earning process is complete (when the company sells the inventory). Furthermore, a company does not earn revenue from purchasing goods. Cash discounts should be considered as a reduction in the cost of the items purchased. 11. $100. 00, $105. 00, $103. 00. (Transportation-In not included for discount. ) 12. Arguments for the specific identification method are as follows: (1) It provides an accurate and ideal matching of costs and revenues because the cost is specifically identified with the sales price. 2) The method is realistic and objective since it adheres to the actual physical flow of goods rather than an artificial flow of costs. (3) Inventory is valued at actual cost instead of an assumed cost. Arguments against the specific identification method include the following: (1) (2) (3) (4) The cost of using it restricts its use to goods of high unit value. The method is impractical for manufacturing processes or cases in which units are comming led and identity lost. It allows an artificial determination of income by permitting arbitrary selection of the items to be sold from a homogeneous group. It may not be a meaningful method of assigning costs in periods of changing price levels. 13. The first-in, first-out method approximates the specific identification method when the physical flow of goods is on a FIFO basis. When the goods are subject to spoilage or deterioration, FIFO is particularly appropriate. In comparison to the specific identification method, an attractive aspect of FIFO is the elimination of the danger of artificial determination of income by the selection of advantageously priced items to be sold. The basic assumption is that costs should be charged in the order in which they are incurred. As a result, the inventories are stated at the latest costs. Where the inventory is consumed and valued in the FIFO manner, there is no accounting recognition of 8-6 Questions Chapter 8 (Continued) unrealized gain or loss. A criticism of the FIFO method is that it maximizes the effects of price fluctuations upon reported income because current revenue is matched with the oldest costs which are probably least similar to current replacement costs. On the other hand, this method produces a balance sheet value for the asset close to current replacement costs. It is claimed that FIFO is deceptive when used in a period of rising prices because the reported income is not fully available since a part of it must be used to replace inventory at higher cost. The results achieved by the weighted average method resemble those of the specific identification method where items are chosen at random or there is a rapid inventory turnover. Compared with the specific identification method, the weighted average method has the advantage that the goods need not be individually identified; therefore accounting is not so costly and the method can be applied to fungible goods. The weighted average method is also appropriate when there is no marked trend in price changes. In opposition, it is argued that the method is illogical. Since it assumes that all sales are made proportionally from all purchases and that inventories will always include units from the first purchases, it is argued that the method is illogical because it is contrary to the chronological flow of goods. In addition, in periods of price changes there is a lag between current costs and costs assigned to income or to the valuation of inventories. If it is assumed that actual cost is the appropriate method of valuing inventories, last-in, first-out is not theoretically correct. In general, LIFO is directly adverse to the specific identification method because the goods are not valued in accordance with their usual physical flow. An exception is the application of LIFO to piled coal or ores which are more or less consumed in a LIFO manner. Proponents argue that LIFO provides a better matching of current costs and revenues. During periods of sharp price movements, LIFO has a stabilizing effect upon reported income figures because it eliminates paper income and losses on inventory and smooths the impact of income taxes. LIFO opponents object to the method principally because the inventory valuation reported in the balance sheet could be seriously misleading. The profit figures can be artificially influenced by management through contracting or expanding inventory quantities. Temporary involuntary depletion of LIFO inventories would distort current income by the previously unrecognized price gains or losses applicable to the inventory reduction. 14. A company may obtain a price index from an outside source (external index)- the government, a trade association, an exchange- or by computing its own index (internal index) using the double extension method. Under the double extension method the ending inventory is priced at both base-year costs and at current-year costs, with the total current cost divided by the total base cost to obtain the current year index. 15. Under the double extension method, LIFO inventory is priced at both base-year costs and currentyear costs. The total current-year cost of the inventory is divided by the total base-year cost to obtain the current-year index. The index for the LIFO pool consisting of product A and product B is computed as follows: Base-Year Cost Product Units Unit Total A 25,500 $10. 20 $260,100 B 10,350 $37. 00 382,950 December 31, 2007 inventory $643,050 Current-Year Cost Base-Year Cost = $956,460 $643,050 Current-Year Cost Unit Total $19. 00 $484,500 $45. 60 471,960 $956,460 = 148. 74, index at 12/31/07. 8-7 Questions Chapter 8 (Continued) 16. The LIFO method results in a smaller net income because later costs, which are higher than earlier costs, are matched against revenue. Conversely, in a period of falling prices, the LIFO method would result in a higher net income because later costs in this case would be lower than earlier costs, and these later costs would be matched against revenue. 17. The dollar-value method uses dollars instead of units to measure increments, or reductions in a LIFO inventory. After converting the closing inventory to the same price level as the opening inventory, the increases in inventories, priced at base-year costs, is converted to the current price level and added to the opening inventory. Any decrease is subtracted at base-year costs to determine the ending inventory. The rincipal advantage is that it requires less record-keeping. It is not necessary to keep records nor make calculations of opening and closing quantities of individual items. Also, the use of a base inventory amount gives greater flexibility in the makeup of the base and eliminates many detailed calculations. The unit LIFO inventory costing method is appli ed to each type of item in an inventory. Any type of item removed from the inventory base (e. g. , magnets) and replaced by another type (e. g. , coils) will cause the old cost (magnets) to be removed from the base and to be replaced by the more current cost of the other item (coils). The dollar-value LIFO costing method treats the inventory base as being composed of a base of cost in dollars rather than of units. Therefore a change in the composition of the inventory (less magnets and more coils) will not change the cost of inventory base so long as the amount of the inventory stated in base-year dollars does not change. 18. (a) LIFO layer- a LIFO layer (increment) is formed when the ending inventory at base-year prices exceeds the beginning inventory at base-year prices. (b) LIFO reserve- the difference between the inventory method used for internal purposes and LIFO. c) LIFO effect- the change in the LIFO reserve (Allowance to Reduce Inventory to LIFO) from one period to the next. 19. December 31, 2007 inventory at December 31, 2006 prices, $1,026,000 ? 1. 08 Less: Inventory, December 31, 2006 Increment added during 2007 at base prices Increment added during 2007 at December 31, 2007 prices, $150,000 X 1. 08 Add: Inventory at December 31, 2006 Inventory, Decemb er 31, 2007, under dollar-value LIFO method $950,000 800,000 $150,000 $162,000 800,000 $962,000 20. Phantom inventory profits occur when the inventory costs matched against sales are less than the replacement cost of the inventory. The costs of goods sold therefore is understated and profit is considered overstated. Phantom profits are said to occur when FIFO is used during periods of rising prices. High inventory profits through involuntary liquidation occur if a company is forced to reduce its LIFO base or layers. If the base or layers of old costs are eliminated, strange results can occur because old, irrelevant costs can be matched against current revenues. A distortion in reported income for a given period may result, as well as consequences that are detrimental from an income tax point of view. -8 SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 8-1 Billie Joel Company Balance Sheet (Partial) December 31 Current assets Cash Receivables (net) Inventories Finished goods Work in process.. Raw materials Prepaid insurance . Total current assets. $150,000 200,000 335,000 685,000 41,000 $1,316,000 $ 190,000 400,000 BRIEF EXERCISE 8-2 Inventory (150 X $30). Accounts Payable.. Accounts Payable (6 X $30) Inventory. Accounts Receivable (125 X $50).. Sales Cost of Goods Sold (125 X $30).. Inventory. 8-9 4,500 4,500 180 180 6,250 6,250 3,750 3,750 BRIEF EXERCISE 8-3 December 31 inventory per physical count Goods-in-transit purchased FOB shipping point Goods-in-transit sold FOB destination December 31 inventory $200,000 15,000 22,000 $237,000 BRIEF EXERCISE 8-4 Cost of goods sold as reported Overstatement of 12/31/06 inventory Overstatement of 12/31/07 inventory Corrected cost of goods sold 12/31/07 retained earnings as reported Overstatement of 12/31/07 inventory Corrected 12/31/07 retained earnings $1,400,000 (110,000) 45,000 $1,335,000 $5,200,000 (45,000) $5,155,000 BRIEF EXERCISE 8-5 $11,850 1,000 Weighted average cost per unit Ending inventory 300 X $11. 85 = Cost of goods available for sale Deduct ending inventory Cost of goods sold (700 X $11. 85) = $11. 85 $3,555 $11,850 3,555 $ 8,295 8-10 BRIEF EXERCISE 8-6 Ending inventory (April 23) 300 X $13 = $3,900 $11,850 3,900 $ 7,950 Cost of goods available for sale Deduct ending inventory Cost of goods sold BRIEF EXERCISE 8-7 April 1 April 15 Ending inventory Cost of goods available for sale Deduct ending inventory Cost of goods sold 250 X $10 = 50 X $12 = $2,500 600 $3,100 $11,850 3,100 $ 8,750 BRIEF EXERCISE 8-8 2005 2006 $123,200 ? 1. 10 = $112,000 $100,000 X 1. 00 $12,000* X 1. 10 *$112,000 – $100,000 2007 $134,560 ? 1. 16 = $116,000 $100,000 X 1. 00 $12,000 X 1. 10 $4,000** X 1. 16 **$116,000 – $112,000 8-11 $100,000 $100,000 13,200 $113,200 $100,000 13,200 4,640 $117,840 BRIEF EXERCISE 8-9 2006 inventory at base amount ($21,708 ? 1. 08) 2005 inventory at base amount Increase in base inventory 2006 inventory under LIFO Layer one Layer two $19,750 X 1. 00 $ 350 X 1. 08 $19,750 378 $20,128 2007 inventory at base amount ($25,935 ? 1. 14) 2006 inventory at base amount Increase in base inventory 2007 inventory under LIFO Layer one Layer two Layer three $19,750 X 1. 00 $ 350 X 1. 08 $ 2,650 X 1. 14 $19,750 378 3,021 $23,149 $22,750 20,100 $ 2,650 $20,100 (19,750) $ 350 8-12 SOLUTIONS TO EXERCISES EXERCISE 8-1 (15–20 minutes) Items 1, 3, 5, 8, 11, 13, 14, 16, and 17 would be reported as inventory in the financial statements. The following items would not be reported as inventory: 2. Cost of goods sold in the income statement. 4. Not reported in the financial statements. 6. Cost of goods sold in the income statement. 7. Cost of goods sold in the income statement. 9. Interest expense in the income statement. 10. Advertising expense in the income statement. 12. Office supplies in the current assets section of the balance sheet. 15. Not reported in the financial statements. 18. Short-term investments in the current asset section of the balance sheet. EXERCISE 8-2 (10–15 minutes) Inventory per physical count Goods in transit to customer, f. . b. destination Goods in transit from vendor, f. o. b. seller Inventory to be reported on balance sheet $441,000 + 38,000 + 51,000 $530,000 The consigned goods of $61,000 are not owned by Jose Oliva and were properly excluded. The goods in transit to a customer of $46,000, shipped f. o. b. shipping point, are properly excluded from the inventory because the title to the goods passed when they left the seller (Oliva) and th erefore a sale and related cost of goods sold should be recorded in 2007. The goods in transit from a vendor of $83,000, shipped f. o. b. estination, are properly excluded from the inventory because the title to the goods does not pass to Oliva until the buyer (Oliva) receives them. 8-13 EXERCISE 8-3 (10–15 minutes) 1. 2. 3. Include. Merchandise passes to customer only when it is shipped. Do not include. Title did not pass until January 3. Include in inventory. Product belonged to Harlowe Inc. at December 31, 2007. 4. Include in inventory. Under invoice terms, title passed when goods were shipped. Do not include. Goods received on consignment remain the property of the consignor. 5. EXERCISE 8-4 (10–15 minutes) 1. Raw Materials Inventory .. Accounts Payable 2. Raw Materials Inventory .. Accounts Payable No adjustment necessary. Accounts Payable .. Raw Materials Inventory. 5. Raw Materials Inventory .. Accounts Payable 19,800 19,800 7,500 7,500 28,000 28,000 8,100 8,100 3. 4. 8-14 EXERCISE 8-5 (15–20 minutes) (a) Inventory December 31, 2007 (unadjusted) Transaction 2 Transaction 3 Transaction 4 Transaction 5 Transaction 6 Transaction 7 Transaction 8 Inventory December 31, 2007 (adjusted) (b) Transaction 3 Sales.. Accounts Receivable .. (To reverse sale entry in 2007) Transaction 4 Purchases (Inventory) .. Accounts Payable .. (To record purchase of merchandise in 2007) Transaction 8 Sales Returns and Allowances. Accounts Receivable .. 2,600 2,600 15,630 15,630 $234,890 13,420 -0-08,540 (10,438) (10,520) 1,500 $237,392 12,800 12,800 8-15 EXERCISE 8-6 (10–20 minutes) 2005 Sales Sales Returns Net Sales Beginning Inventory Ending Inventory Purchases Purchase Returns and Allowances Transportation-in Cost of Good Sold Gross Profit $290,000 11,000 279,000 20,000 32,000* 242,000 5,000 8,000 233,000 46,000 2006 $360,000 13,000 347,000 32,000 37,000 260,000 8,000 9,000 256,000 91,000 2007 $410,000 20,000 390,000 37,000** 44,000 298,000 10,000 12,000 293,000 97,000 *This was given as the beginning inventory for 2006. *This was calculated as the ending inventory for 2006. EXERCISE 8-7 (10–15 minutes) (a) May 10 Purchases Accounts Payable .. ($15,000 X . 98) May 11 Purchases Accounts Payable .. ($13,200 X . 99) May 19 Accounts Payable. Cash. May 24 Purchases Accounts Payable ($11,500 X . 98). 8-16 14,700 14,700 13,068 13,068 14,700 14,700 11,270 11,270 EXERCISE 8-7 (Continued) (b) May 31 Purchase Discounts Lost . Accounts Payable ($13,200 X . 01) .. (Discount lost on purchase of May 11, $13,200, terms 1/15, n/30) EXERCISE 8-8 (a) Feb. 1 Inventory [$10,800 – ($10,800 X 10%)].. Accounts Payable.. Feb. 4 Accounts Payable [$2,500 – ($2,500 X 10%)] .. Inventory. Feb. 13 Accounts Payable ($9,720 – $2,250) .. Inventory (3% X $7,470) Cash (b) Feb. 1 Purchases [$10,800 – ($10,800 X 10%)] .. Accounts Payable.. Accounts Payable [$2,500 – ($2,500 X 10%)] Purchase Returns and Allowances Feb. 13 Accounts Payable ($9,720 – $2,250) .. Purchase Discounts (3% X $7,470). Cash 8-17 132 132 9,720 9,720 2,250 2,250 7,470 224. 10 7,245. 90 9,720 9,720 Feb. 4 2,250 2,250 7,470 224. 10 7,245. 90 EXERCISE 8-8 (Continued) (c) Purchase price (list) Less: Trade discount (10% X $10,800) Price on which cash discount based Less: Cash discount (3% X $9,720) Net price EXERCISE 8-9 (15–25 minutes) (a) Jan. 4 Accounts Receivable. Sales (80 X $8) Jan. 11 Purchases ($150 X $6).. Accounts Payable .. Accounts Receivable. Sales (120 X $8. 75). Jan. 20 Purchases (160 X $7) . Accounts Payable .. Accounts Receivable. Sales (100 X $9) Jan. 31 Inventory ($7 X 110) Cost of Goods Sold. Purchases ($900 + $1,120) . Inventory (100 X $5).. *($500 + $2,020 – $770) 770 1,750* 2,020 500 1,120 1,120 900 900 900 900 1,050 1,050 640 640 $10,800 1,080 9,720 291. 60 $ 9,428. 40 Jan. 13 Jan. 27 8-18 EXERCISE 8-9 (Continued) (b) Sales ($640 + $1,050 + $900) Cost of goods sold Gross profit Jan. 4 $2,590 1,750 $ 840 640 640 400 400 900 900 1,050 1,050 700 700 1,120 1,120 900 900 650 650 (c) Accounts Receivable .. Sales (80 X $8) . Cost of Goods Sold .. Inventory (80 X $5) .. Jan. 11 Inventory . Accounts Payable (150 X $6) Accounts Receivable .. Sales (120 X $8. 75) .. Cost of Goods Sold .. Inventory ([(20 X $5) + (100 X $6)] Jan. 13 Jan. 20 Inventory . Accounts Payable (160 X $7) . Accounts Receivable . Sales (100 X $9).. Cost of Goods Sold .. Inventory [(50 X $6) + (50 X $7)] .. Jan. 27 (d) Sales Cost of goods sold ($400 + $700 +$650) Gross profit 8-19 $2,590 1,750 $ 840 EXERCISE 8-10 (10–15 minutes) Current Year Overstated Overstated Overstated Overstated No effect Overstated* No effect No effect Overstated Overstated Overstated Overstated Subsequent Year No effect No effect No effect Understated No effect No effect No effect No effect No effect No effect No effect Understated . Working capital Current ratio Retained earnings Net income Working capital Current ratio Retained earnings Net income Working capital Current ratio Retained earnings Net income 2. 3. *Assume that the correct current ratio is greater than one. EXERCISE 8-11 (10–15 minutes) (a) $370,000 = 1. 85 to 1 $200,000 $370,000 + $22,000 – $13,000 + $3,000 $382,000 = = 2. 06 to 1 $200,000 – $15,000 $185,000 Adjust Income Increase (Decrease) $22,000 15,000 (13,000) (b) (c) 1. 2. 3. 4. Event Understatement of ending inventory Overstatement of purchases Overstatement of ending inventory Overstatement of advertising expense; understatement of cost of goods sold Effect of Error Decreases net income Decreases net income Increases net income 0 $24,000 8-20 EXERCISE 8-12 (15–20 minutes) Errors in Inventories Net Income Year 2002 2003 2004 2005 2006 2007 Per Books $ 50,000 52,000 54,000 56,000 58,000 60,000 $330,000 2,000 8,000 $3,000 9,000 $11,000 2,000 Add Overstatement Jan. 1 Deduct Understatement Jan. 1 Deduct OverstateAdd UnderstateCorrected Net Income $ 47,000 46,000 $11,000 74,000 45,000 60,000 50,000 $322,000 ent Dec. 31 ment Dec. 31 $3,000 9,000 EXERCISE 8-13 (15–20 minutes) (a) (1) Cost of Goods Sold LIFO 500 @ $13 = 500 @ $12 = $ 6,500 6,000 $12,500 $ 3,000 8,400 $11,400 Ending Inventory 300 @ $10 = 300 @ $12 = $3,000 3,600 $6,600 $6,500 1,200 $7,700 (2) FIFO 300 @ $10 = 700 @ $12 = 500 @ $13 = 100 @ $12 = (b) LIFO 100 @ $10 = 300 @ $12 = 200 @ $1 3 = $ 1,000 3,600 2,600 $ 7,200 8-21 EXERCISE 8-13 (Continued) (c) Sales Cost of Goods Sold Gross Profit (FIFO) $25,400 = ($24 X 200) + ($25 X 500) + ($27 X 300) 11,400 $14,000 Note: FIFO periodic and FIFO perpetual provide the same gross profit and inventory value. d) LIFO matches more current costs with revenue. When prices are rising (as is generally the case), this results in a higher amount for cost of goods sold and a lower gross profit. As indicated in this exercise, prices were rising and cost of goods sold under LIFO was higher. EXERCISE 8-14 (20–25 minutes) (a) (1) LIFO 600 @ $6. 00 = $3,600 100 @ $6. 08 = 608 $4,208 (2) Average cost Total cost Total units $33,655* 5,300 = = $6. 35 average cost per unit 700 @ $6. 35 = $4,445 8-22 EXERCISE 8-14 (Continued) *Units 600 1,500 800 1,200 700 500 5,300 (b) (1) FIFO 500 @ $6. 79 = $3,395 200 @ $6. 0 = 1,320 $4,715 (2) LIFO 100 @ $6. 00 = $ 600 100 @ $6. 08 = 608 500 @ $6. 79 = 3,395 $4,603 (c) Total merchandise available fo r sale Less inventory (FIFO) Cost of goods sold $33,655 4,715 $28,940 @ @ @ @ @ @ Price $6. 00 $6. 08 $6. 40 $6. 50 $6. 60 $6. 79 = = = = = = Total Cost $ 3,600 9,120 5,120 7,800 4,620 3,395 $33,655 (d) FIFO. 8-23 EXERCISE 8-15 (15–20 minutes) (a) Shania Twain Company COMPUTATION OF INVENTORY FOR PRODUCT BAP UNDER FIFO INVENTORY METHOD March 31, 2007 Units 600 800 200 1,600 Unit Cost $12. 00 11. 00 10. 00 Total Cost $ 7,200 8,800 2,000 $18,000 March 26, 2007 February 16, 2007 January 25, 2007 (portion) March 31, 2007, inventory (b) Shania Twain Company COMPUTATION OF INVENTORY FOR PRODUCT BAP UNDER LIFO INVENTORY METHOD March 31, 2007 Units 600 1,000 1,600 Unit Cost $8. 00 9. 00 Total Cost $ 4,800 9,000 $13,800 Beginning inventory January 5, 2007 (portion) March 31, 2007, inventory (c) Shania Twain Company COMPUTATION OF INVENTORY FOR PRODUCT BAP UNDER WEIGHTED AVERAGE INVENTORY METHOD March 31, 2007 Units 600 1,200 1,300 800 600 4,500 Unit Cost $ 8. 00 9. 00 10. 00 11. 00 12. 00 Total Cost $ 4,800 10,800 13,000 8,800 7,200 $44,600 Beginning inventory January 5, 2007 January 25, 2007 February 16, 2007 March 26, 2007 Weighted average cost ($44,600 ? 4,500) March 31, 2007, inventory *Rounded off. 1,600 $ 9. 91* $ 9. 91 $15,856 8-24 EXERCISE 8-16 (15–20 minutes) (a) (1) 2,100 units available for sale – 1,400 units sold = 700 units in the ending inventory. 500 @ $4. 58 = $2,290 200 @ 4. 60 = 920 700 $3,210 Ending inventory at FIFO cost. (2) 100 @ $4. 10 = 600 @ 4. 20 = 700 $ 410 2,520 $2,930 Ending inventory at LIFO cost. (3) $9,240 cost of goods available for sale ? 2,100 units available for sale = $4. 40 weighted-average unit cost. 00 units X $4. 40 = $3,080 Ending inventory at weighted-average cost. (b) (1) LIFO will yield the lowest gross profit because this method will yield the highest cost of goods sold figure in the situation presented. The company has experienced rising purchase prices for its inventory acquisitions. In a period of rising prices, LIFO will yield the highest cost of goods sold because the most recent purchase prices (which are the higher prices in this case) are used to price cost of goods sold while the older (and lower) purchase prices are used to cost the ending inventory. 2) LIFO will yield the lowest ending inventory because LIFO uses the oldest costs to price the ending inventory units. The company has experienced rising purchase prices. The oldest costs in this case are the lower costs. 8-25 EXERCISE 8-17 (10–15 minutes) (a) (1) 400 @ $30 = 160 @ $25 = $12,000 4,000 $16,000 (2) 400 @ $20 = 160 @ $25 = $ 8,000 4,000 $12,000 (b) (1) (2) FIFO LIFO $16,000 [same as (a)] 100 @ $20 = 60 @ $25 = 400 @ $30 = $ 2,000 1,500 12,000 $15,500 8-26 EXERCISE 8-18 (15–20 minutes) First-in, first-out Sales Cost of goods sold: Inventory, Jan. Purchases Cost of goods available Inventory, Dec. 31 Cost of goods sold Gross profit Operating expenses Net income $120,000 592,000* 712,000 235,000** 477,000 573,000 200,000 $ 373,000 $1,050,000 $120,000 592,000 712,000 164,000*** 548,000 502,000 200,000 $ 302,000 Last-in, first-out $1,050,000 *Purchases 6,000 @ $22 = 10,000 @ $25 = 7,000 @ $30 = $132,000 250,000 210,000 $592,000 **Computation of inventory, Dec. 31: First-in, first-out: 7,000 units @ $30 = 1,000 units @ $25 = $210,000 25,000 $235,000 ***Last-in, first-out: 6,000 units @ $20 = 2,000 units @ $22 = $120,000 44,000 $164,000 8-27 EXERCISE 8-19 (20–25 minutes) Sandy Alomar Corporation SCHEDULES OF COST OF GOODS SOLD For the First Quarter Ended March 31, 2007 Schedule 1 First-in, First-out Beginning inventory Plus purchases Cost of goods available for sale Less ending inventory Cost of goods sold $ 40,000 146,200* 186,200 61,300 $124,900 Schedule 2 Last-in, First-out $ 40,000 146,200 186,200 56,800 $129,400 *($33,600 + $25,500 + $38,700 + $48,400) Schedules Computing Ending Inventory Units Beginning inventory Plus purchases Units available for sale Less sales ($150,000 ? 5) Ending inventory 10,000 34,000 44,000 30,000 14,000 The unit computation is the same for both assumptions, but the cost assigned to the units of ending inventory are different. First-in, First-out (Schedule 1) 11,000 3,000 14,000 at $4. 40 = at $4. 30 = $48,400 12,900 $61,300 Last-in, First-out (Schedule 2) 10,000 at $4. 00 = 4,000 at $4. 20 = 14,000 $40,000 16,800 $56,800 8-28 EXERCISE 8-20 (10–15 minutes) (a) FIFO Ending Inventory 12/31/07 $ 827. 64 76 @ $10. 89* = 24 @ $11. 88** = 285. 12 $1,112. 76 *[$11. 00 – . 01 ($11. 00)] **[$12. 00 – . 01 ($12. 00)] (b) LIFO Cost of Goods Sold- 2007 76 @ $10. 89 = $ 827. 64 84 @ $11. 88 = 997. 92 90 @ $14. 85* = 1,336. 50 15 @ $15. 84** = 237. 0 $3,399. 66 *[$15. 00 – . 01 ($15)] **[$16. 00 – . 01 ($16)] (c) FIFO matches older costs with revenue. When prices are declining, as in this case, this results in a higher amount for cost of goods sold. Therefore, it is recommended that FIFO be used by Howie Long Shop to minimize taxable income. EXERCISE 8-21 (10â₠¬â€œ15 minutes) (a) The difference between the inventory used for internal reporting purposes and LIFO is referred to as the Allowance to Reduce Inventory to LIFO or the LIFO reserve. The change in the allowance balance from one period to the next is called the LIFO effect (or as shown in this example, the LIFO adjustment). LIFO subtracts inflation from inventory costs by charging the items purchased recently to cost of goods sold. As a result, ending inventory (assuming increasing prices) will be lower than FIFO or average cost. 8-29 (b) EXERCISE 8-21 (Continued) (c) Cash flow was computed as follows: Revenue $3,200,000 Cost of goods sold (2,800,000) Operating expenses (150,000) Income taxes (75,600) Cash flow $ 174,400 If the company has any sales on account or payables, then the cash flow number is incorrect. It is assumed here that the cash basis of accounting is used. (d) The company has extra cash because its taxes are less. The reason taxes are lower is because cost of goods sold (in a period of inflation) is higher under LIFO than FIFO. As a result, net income is lower which leads to lower income taxes. If prices are decreasing, the opposite effect results. EXERCISE 8-22 (25–30 minutes) (a) (1) Ending inventory- Specific Identification Date No. Units Unit Cost December 2 July 20 100 50 150 $30 25 Total Cost $3,000 1,250 $4,250 (2) Ending inventory- FIFO Date No. Units December 2 September 4 100 50 150 Unit Cost $30 28 Total Cost $3,000 1,400 $4,400 (3) Ending inventory- LIFO Date No. Units January 1 March 15 100 50 150 Unit Cost $20 24 Total Cost $2,000 1,200 $3,200 8-30 EXERCISE 8-22 (Continued) (4) Ending inventory- Average Cost Date January 1 March 15 July 20 September 4 December 2 Explanation Beginning inventory Purchase Purchase Purchase Purchase No. Units 100 300 300 200 100 1,000 Unit Cost $20 24 25 28 30 Total Cost $ 2,000 7,200 7,500 5,600 3,000 $25,300 $25,300 ? 1,000 = $25. 30 Ending Inventory- Average Cost No. Units 150 (b) Unit Cost $25. 30 Total Cost $3,795 Double Extension Method Base-Year Costs Current Costs Total $3,000 Units 100 50 Current-Year Cost Per Unit $30 $28 Total $3,000 1,400 $4,400 Units 150 Base-Year Cost Per Unit $20 Ending Inventory for the Period at Current Cost Ending Inventory for the Period at Base-Year Cost = $4,400 = 1. 4667 $3,000 $3,000 2,000 1,000 1. 4667 1,467 2,000 $3,467 Ending inventory at base-year prices ($4,400 ? 1. 4667) Base layer (100 units at $20) Increment in base-year dollars Current index Increment in current dollars Base layer (100 units at $20) Ending inventory at dollar-value LIFO 8-31 EXERCISE 8-23 (5–10 minutes) $97,000 – $92,000 = $5,000 increase at base prices. $98,350 – $92,600 = $5,750 increase in dollar-value LIFO value. $5,000 X Index = $5,750. Index = $5,750 ? $5,000. Index = 115 EXERCISE 8-24 (15–20 minutes) (a) 12/31/07 inventory at 1/1/07 prices, $140,000 ? 1. 12 Inventory 1/1/07 Inventory decrease at base prices Inventory at 1/1/07 prices Less decrease at 1/1/07 prices Inventory 12/31/07 under dollar-value LIFO method (b) 12/31/08 inventory at base prices, $172,500 ? 1. 15 12/31/07 inventory at base prices Inventory increment at base prices Inventory at 12/31/07 Increment added during 2008 at 12/31/08 prices, $25,000 X 1. 15 Inventory 12/31/08 $125,000 160,000 $ 35,000 $160,000 35,000 $125,000 $150,000 125,000 $ 25,000 $125,000 28,750 $153,750 EXERCISE 8-25 (20–25 minutes) Change from Prior Year - $+30,000 (20,000) +4,000 +16,000 +12,000 Current $ 2004 2005 2006 2007 2008 2009 $ 80,000 115,500 108,000 122,200 154,000 176,900 Price Index 1. 00 1. 05 1. 20 1. 30 1. 40 1. 45 8-32 Base Year $ $ 80,000 110,000 90,000 94,000 110,000 122,000 EXERCISE 8-25 (Continued) Ending Inventory- Dollar-value LIFO: 2004 2005 $80,000 $80,000 @ 1. 00 = 30,000 @ 1. 05 = $ 80,000 31,500 $111,500 2006 $80,000 @ 1. 00 = 10,000 @ 1. 05 = $ 80,000 10,500 $ 90,500 2007 $80,000 @ 1. 00 = 10,000 @ 1. 05 = 4,000 @ 1. 30 = $ 80,000 10,500 5,200 $ 95,700 2009 $80,000 @ 1. 0 = 10,000 @ 1. 05 = 4,000 @ 1. 30 = 16,000 @ 1. 40 = 12,000 @ 1. 45 = 2008 $80,000 @ 1. 00 = 10,000 @ 1. 05 = 4,000 @ 1. 30 = 16,000 @ 1. 40 = $ 80,000 10,500 5,200 22,400 $118,100 $ 80,000 10,500 5,200 22,400 17,400 $135,500 EXERCISE 8-26 (15–20 minutes) Change from Date Dec. 31, 2003 Dec. 31, 2004 Dec. 31, 2005 Dec. 31, 2006 Dec. 31, 2007 Current $ $ 70,000 90,300 95,12 0 105,600 100,000 Price Index 1. 00 1. 05 1. 16 1. 20 1. 25 Base-Year $ $70,000 86,000 82,000 88,000 80,000 Prior Year - $+16,000 (4,000) +6,000 (8,000) 8-33 EXERCISE 8-26 (Continued) Ending Inventory- Dollar-value LIFO: Dec. 31, 2003 $70,000 Dec. 1, 2004 $70,000 @ 1. 00 = 16,000 @ 1. 05 = $70,000 16,800 $86,800 Dec. 31, 2005 $70,000 @ 1. 00 = 12,000 @ 1. 05 = $70,000 12,600 $82,600 Dec. 31, 2006 $70,000 @ 1. 00 = 12,000 @ 1. 05 = 6,000 @ 1. 20 = $70,000 12,600 7,200 $89,800 Dec. 31, 2007 $70,000 @ 1. 00 = 10,000 @ 1. 05 = $70,000 10,500 $80,500 8-34 TIME AND PURPOSE OF PROBLEMS Problem 8-1 (Time 30–40 minutes) Purpose- to provide a multipurpose problem with trade discounts, goods in transit, computing internal price indexes, dollar-value LIFO, comparative FIFO, LIFO, and average cost computations, and inventoriable cost identification. Problem 8-2 (Time 25–35 minutes) Purpose- to provide the student with eight different situations that require analysis to determine their impact on inventory, accounts payable, and net sales. Problem 8-3 (Time 20–25 minutes) Purpose- to provide the student with an opportunity to prepare general journal entries to record purchases on a gross and net basis. Problem 8-4 (Time 40–55 minutes) Purpose- to provide a problem where the student must compute the inventory using a FIFO, LIFO, and average cost assumption. These inventory value determinations must be made under two differing assumptions: (1) perpetual inventory records are kept in units only and (2) perpetual records are kept in dollars. Many detailed computations must be made in this problem. Problem 8-5 (Time 40–55 minutes) Purpose- to provide a problem where the student must compute the inventory using a FIFO, LIFO, and average cost assumption. These inventory value determinations must be made under two differing assumptions: (1) perpetual inventory records are kept in units only and (2) perpetual records are kept in dollars. This problem is very similar to Problem 8-4, except that the differences in inventory values must be explained. Problem 8-6 (Time 25–35 minutes) Purpose- to provide a problem where the student must compute cost of goods sold using FIFO, LIFO, and weighted average, under both a periodic and perpetual system. Problem 8-7 (Time 30–40 minutes) Purpose- to provide a problem where the student must identify the accounts that would be affected if LIFO had been used rather than FIFO for purposes of computing inventories. Problem 8-8 (Time 30–40 minutes) Purpose- to provide a problem which covers the use of inventory pools for dollar-value LIFO. The student is required to compute ending inventory, cost of goods sold, and gross profit using dollar-value LIFO, first with one inventory pool and then with three pools. Problem 8-9 (Time 25–35 minutes) Purpose- the student computes the internal conversion price indexes for a LIFO inventory pool and then computes the inventory amounts using the dollar-value LIFO method. Problem 8-10 (Time 30–35 minutes) Purpose- to provide the student with the opportunity to compute inventories using the dollar-value approach. An index must be developed in this problem to price the new layers. This problem will prove difficult for the student because the indexes are hidden. Problem 8-11 (Time 40–50 minutes) Purpose- to provide the student with an opportunity to write a memo on how a dollar-value LIFO pool works. In addition, the student must explain the step-by-step procedure used to compute dollar value LIFO. 8-35 SOLUTIONS TO PROBLEMS PROBLEM 8-1 1. $150,000 – ($150,000 X . 20) = $120,000; $120,000 – ($120,000 X . 10) = $108,000, cost of goods purchased $1,100,000 + $69,000 = $1,169,000. The $69,000 of goods in transit on which title had passed on December 24 (f. o. b. hipping point) should be added to 12/31/06 inventory. The $29,000 of goods shipped (f. o. b. shipping point) on January 3, 2007, should remain part of the 12/31/06 inventory. Because no date was associated with the units issued or sold, the periodic (rather than perpetual) inventory method must be assumed. FIFO inventory cost: 1,000 units at $24 1,100 units at 23 Total 1,500 units at $ 21 600 units at 22 Total 1,500 at $21 2,000 at 22 3,500 at 23 1,000 at 24 8,000 $ 24,000 25,300 $ 49,300 $ 31,500 13,200 $ 44,700 $ 31,500 44,000 80,500 24,000 $180,000 2. 3. LIFO inventory cost: Average cost: Totals $180,000 ? 8,000 = $22. 0 Ending inventory (2,100 X $22. 50) is $47,250. 8-36 PROBLEM 8-1 (Continued) 4. Computation of price indexes: 12/31/06 $252,000 = 105 $240,000 $286,720 = 112 $256,000 12/31/07 Dollar-value LIFO inventory 12/31/06: Increase $240,000 – $200,000 = 12/31/06 price index Increase in terms of 105 Base inventory Dollar-value LIFO inventory $ 40,000 X 1. 05 42,000 2006 Layer 200,000 $242,000 Dollar-value LIFO inventory 12/31/07: Increase $256,000 – $240,000 = 12/31/07 price index Increase in terms of 112 2006 layer Base inventory Dollar-value LIFO inventory 5. $ 16,000 X 1. 12 17,920 2007 Layer 42,000 200,000 $259,920 The inventoriable costs for 2007 are: Merchandise purchased Add: Freight-in Deduct: Purchase returns Purchase discounts Inventoriable cost $16,500 6,800 $909,400 22,000 931,400 23,300 $908,100 8-37 PROBLEM 8-2 James T. Kirk Company Schedule of Adjustments December 31, 2007 Inventory Initial amounts Adjustments: 1. 2. 3. 4. 5. 6. 7. 8. Total adjustments Adjusted amounts 1. $1,520,000 NONE 71,000 30,000 32,000 21,000 27,000 NONE 3,000 184,000 $1,704,000 Accounts Payable $1,200,000 NONE 71,000 NONE NONE NONE NONE 56,000 6,000 133,000 $1,333,000 Net Sales $8,150,000 (40,000) NONE NONE (47,000) NONE NONE NONE NONE (87,000) $8,063,000 The $31,000 of tools on the loading dock were properly included in the physical count. The sale should not be recorded until the goods are picked up by the common carrier. Therefore, no adjustment is made to inventory, but sales must be reduced by the $40,000 billing price. The $71,000 of goods in transit from a vendor to James T. Kirk were shipped f. o. b. shipping point on 12/29/07. Title passes to the buyer as soon as goods are delivered to the common carrier when sold f. o. b. shipping point. Therefore, these goods are properly includable in Kirk’s inventory and accounts payable at 12/31/07. Both inventory and accounts payable must be increased by $71,000. The work-in-process inventory sent to an outside processor is Kirk’s property and should be included in ending inventory. Since this inventory was not in the plant at the time of the physical count, the inventory column must be increased by $30,000. 8-38 2. 3. PROBLEM 8-2 (Continued) 4. The tools costing $32,000 were recorded as sales ($47,000) in 2007. However, these items were returned by customers on December 31, so 2007 net sales should be reduced by the $47,000 return. Also, $32,000 has to be added to the inventory column since these goods were not included in the physical count. The $21,000 of Kirk’s tools shipped to a customer f. o. b. destination are still owned by Kirk while in transit because title does not pass on these goods until they are received by the buyer. Therefore, $21,000 must be added to the inventory column. No adjustment is necessary in the sales column because the sale was properly recorded in 2008 when the customer received the goods. The goods received from a vendor at 5:00 p. m. on 12/31/07 should be included in the ending inventory, but were not included in the physical count. Therefore, $27,000 must be added to the inventory column. No adjustment is made to accounts payable, since the invoice was included in 12/31/07 accounts payable. The $56,000 of goods received on 12/26/07 were properly included in the physical count of inventory; $56,000 must be added to accounts payable since the invoice was not included in the 12/31/07 accounts payable balance. Since one-half of the freight-in cost ($6,000) pertains to merchandise properly included in inventory as of 12/31/07, $3,000 should be added to the inventory column. The remaining $3,000 debit should be reflected in cost of goods sold. The full $6,000 must be added to accounts payable since the liability was not recorded. 5. 6. 7. 8. 8-39 PROBLEM 8-3 (a) (1) 8/10 Purchases. Accounts Payable .. 8/13 Accounts Payable. Purchase Returns and Allowances 8/15 Purchases. Accounts Payable .. 8/25 Purchases. Accounts Payable .. 8/28 Accounts Payable. Cash . 9,000 9,000 1,200 1,200 12,000 12,000 15,000 15,000 12,000 12,000 (2) Purchases- addition in cost of goods sold section of income statement. Purchase returns and allowances- deduction from purchases in cost of goods sold section of the income statement. Accounts payable- current liability in the current liabilities section of the balance sheet. 8/10 Purchases. Accounts Payable ($9,000 X . 98) .. 8/13 Accounts Payable. Purchase Returns and Allowances ($1,200 X . 98) 8-40 (b) (1) 8,820 8,820 1,176 1,176 PROBLEM 8-3 (Continued) 8/15 Purchases .. Accounts Payable ($12,000 X . 99).. 8/25 Purchases .. Accounts Payable ($15,000 X . 98).. 8/28 Accounts Payable Purchase Discounts Lost. Cash 2. 8/31 Purchase Discounts Lost. Accounts Payable . (. 02 X [$9,000 – $1,200]) 11,880 11,880 14,700 14,700 11,880 120 12,000 156 156 3. Same as part (a) (2) except: Purchase Discounts Lost- treat as financial expense in income statement. (c) The second method is better theoretically because it results in the inventory being carried net of purchase discounts, and purchase discounts not taken are shown as an expense. The first method is normally used, however, for practical reasons. 8-41 PROBLEM 8-4 (a) Purchases Total Units April 1 (balance on hand) April 4 April 11 April 18 April 26 April 30 Total units Total units sold Total units (ending inventory) 100 400 300 200 500 200 1,700 1,400 300 Sales Total Units April 5 April 12 April 27 April 28 Total units 300 200 800 100 1,400 Assuming costs are not computed for each withdrawal: (1) First-in, first-out. Date of Invoice April 30 April 26 No. Units 200 100 Unit Cost $5. 80 5. 60 Total Cost $1,160 560 $1,720 (2) Last-in, first-out. Date of Invoice April 1 April 4 No. Units 100 200 Unit Cost $5. 0 5. 10 Total Cost $ 500 1,020 $1,520 8-42 PROBLEM 8-4 (Continued) (3) Average cost. Cost of Part X available. Date of Invoice No. Units April 1 April 4 April 11 April 18 April 26 April 30 Total Available 100 400 300 200 500 200 1,700 Unit Cost $5. 00 5. 10 5. 30 5. 35 5. 60 5. 80 Total Cost $ 500 2,040 1,590 1,070 2,800 1,160 $9,160 Average cost per unit = $ 9,160 ? 1,700 = $5. 39. Inventory, April 30 = 300 X $5. 39 = $1,617. (b) Assuming costs are computed for each withdrawal: (1) First-in, first out. The inventory would be the same in amount as in part (a), $1,720. 8-43 PROBLEM 8-4 (Continued) (2) Last-in, first-out. Purchased Date April 1 April 4 April 5 April 11 300 5. 30 No. of units 100 400 Unit cost $5. 00 5. 10 300 $5. 10 No. of units Sold Unit cost No. of units 100 100 400 100 100 100 100 300 April 12 200 5. 30 100 100 100 April 18 200 5. 35 100 100 100 200 April 26 500 5. 60 100 100 100 200 500 April 27 800 500 @ 200 @ 100 @ April 28 April 30 200 5. 80 100 5. 60 5. 35 5. 30 5. 10 100 100 100 100 200 5. 00 5. 10 5. 00 5. 00 5. 80 1,010 500 1,660 Balance* Unit cost $5. 00 5. 00 5. 10 5. 00 5. 10 5. 00 5. 10 5. 30 5. 00 5. 10 5. 30 5. 00 5. 10 5. 30 5. 35 5. 00 5. 10 5. 30 5. 35 5. 60 5,410 2,610 1,540 2,600 Amount $ 500 2,540 1,010 Inventory April 30 is $1,660. *The balance on hand is listed in detail after each transaction. 8-44 PROBLEM 8-4 (Continued) (3) Average cost. Purchased Date April 1 April 4 April 5 April 11 April 12 April 18 April 26 April 27 April 28 April 30 200 5. 80 200 500 5. 35 5. 60 800 100 5. 4336 5. 4336 300 5. 30 200 5. 2120 No. of units 100 400 Unit cost $5. 00 5. 10 300 $5. 0800 No. of units Sold Unit cost No. of units 100 500 200 500 300 500 1,000 200 100 300 Balance Unit cost* $5. 0000 5. 0800 5. 0800 5. 2120 5. 2120 5. 2672 5. 4336 5. 4336 5. 4336 5. 6779 Amount $ 500. 00 2,540. 00 1,016. 00 2,606. 00 1,563. 60 2,633. 60 5,433. 0 1,086. 72 543. 36 1,703. 36 Inventory April 30 is $1,703. *Four decimal places are used to minimize rounding errors. 8-45 PROBLEM 8-5 (a) Assuming costs are not computed for each withdrawal (units received, 5,600, minus units issued, 4,700, equals ending inventory at 900 units): (1) First-in, first-out. Date of Invoice No. Units Jan. 28 900 Unit Cost $3. 60 To tal Cost $3,240 (2) Last-in, first-out. Date of Invoice No. Units Jan. 2 (3) 900 Unit Cost $3. 00 Total Cost $2,700 Average cost. Cost of goods available: Date of Invoice No. Units Jan. 2 Jan. 10 Jan. 18 Jan. 23 Jan. 28 Total Available 1,200 600 1,000 1,300 1,500 5,600 Unit Cost $3. 00 3. 20 3. 30 3. 40 3. 60 Total Cost $ 3,600 1,920 3,300 4,420 5,400 $18,640 Average cost per unit = $18,640 ? 5,600 = $ 3. 33 Cost of inventory Jan. 31 = 900 X $3. 33 = $2,997 (b) Assuming costs are computed at the time of each withdrawal: Under FIFO- Yes. The amount shown as ending inventory would be the same as in (a) above. In each case the units on hand would be assumed to be part of those purchased on Jan. 28. Under LIFO- No. During the month the available balance dropped below the ending inventory quantity so that the layers of oldest costs were partially liquidated during the month. 8-46 PROBLEM 8-5 (Continued) Under Average Cost- No. A new average cost would be computed each time a withdrawal was made instead of only once for all items purchased during the year. The calculations to determine the inventory on this basis are given below. (1) First-in, first-out. The inventory would be the same in amount as in part (a), $3,240. Last-in, first-out. Received Date Jan. 2 Jan. 7 Jan. 10 Jan. 13 Jan. 18 1,000 3. 30 600 3. 20 500 300 3. 20 3. 30 No. of units 1,200 Unit cost $3. 00 700 $3. 00 Issued No. of units Unit cost No. of units 1,200 500 500 600 500 100 500 100 700 Jan. 20 700 100 300 Jan. 23 Jan. 26 Jan. 28 1,500 3. 0 1,300 3. 40 800 3. 40 3. 30 3. 20 3. 00 200 200 1,300 200 500 200 500 1,500 Jan. 31 1,300 3. 60 200 500 200 3. 00 3. 00 3. 40 3. 00 3. 40 3. 00 3. 40 3. 60 3. 00 3. 40 3. 60 3,020 7,700 600 5,020 2,300 Balance Unit cost* $3. 00 3. 00 3. 00 3. 20 3. 00 3. 20 3. 00 3. 20 3. 30 4,130 Amount $3,600 1,500 3,420 1,820 (2) Inventory, January 31 is $3,020. 8-47 PROBLEM 8-5 (Continued) (3) Average cost. Received Date Jan. 2 Jan. 7 Jan. 10 Jan. 13 Jan. 18 Jan. 20 Jan. 23 Jan. 26 Jan. 28 Jan. 31 1,500 3. 60 1,300 3. 5291 1,300 3. 40 800 3. 3773 1,000 3. 30 600 3. 20 500 300 1,100 3. 1091 3. 2281 3. 2281 No. of units 1,200 Unit cost $3. 0 700 $3. 0000 Issued No. of units Unit cost No. of units 1,200 500 1,100 600 1,300 200 1,500 700 2,200 900 Balance Unit cost* $3. 0000 3. 0000 3. 1091 3. 1091 3. 2281 3. 2281 3. 3773 3. 3773 3. 5291 3. 5291 Amount $3,600 1,500 3,420 1,865 4,197 646 5,066 2,364 7,764 3,176 Inventory, January 31 is $3,176. *Four decimal places are used to minimize rounding errors. 8-48 PROBLEM 8-6 (a) Beginning inventory Purchases (2,000 + 3,000) Units available for sale Sales (2,500 + 2,000) Goods on hand Periodic FIFO 1,000 X $12 = 2,000 X $18 = 1,500 X $23 = 4,500 1,000 5,000 6,000 4,500 1,500 $12,000 36,000 34,500 $82,500 (b) Perpetual FIFO Same as periodic: Periodic LIFO 3,000 X $23 = 1,500 X $18 = 4,500 Perpetual LIFO Purchased $82,500 (c) $69,000 27,000 $96,000 (d) Date 1/1 2/4 2/20 4/2 11/4 Sold Balance 1,000 X $12 = } $12,000 $48,000 2,000 X $18 = $36,000 2,000 X $18 500 X $12 3,000 X $23 = $69,000 2,000 X $23 = $46,000 ______ $88,000 1,000 X $12 2,000 X $18 } $42,000 500 X $12 500 X $12 3,000 X $23 500 X $12 1,000 X $23 = } } $ 6,000 $75,000 $29,000 8-49 PROBLEM 8-6 (Continued) (e) Periodic weighted-average 1,000 X $12 = $ 12,000 2,000 X $18 = 36,000 3,000 X $23 = 69,000 $117,000 ? 6,000 = $19. 50 4,500 X $19. 50 $87,750 (f) Perpetual moving average Date 1/1 2/4 2/20 4/2 11/4 3,000 X $23 = $69,000 2,000 X $22 = 44,000 $84,000 a Purchased Sold Balance 1,000 X $12 = $12,000 2,000 X $18 = $36,000 2,500 X $16 = $40,000 3,000 X $16 = 500 X $16 = 3,500 X $22 = 1,500 X $22 = a 48,000 8,000 77,000 33,000 500 X $16 = $ 8,000 3,000 X $23 = 69,000 3,500 $77,000 ($77,000 ? 3,500 = $22) 8-50 PROBLEM 8-7 The accounts in the 2008 financial statements which would be affected by a change to LIFO and the new amount for each of the accounts are as follows: Account Cash Inventory Retained earnings Cost of goods sold Income taxes New amount for 2008 $165,600 120,000 215,600 810,000 94,400 1) (2) (3) (4) (5) The calculations for both 2007 and 2008 to support the conversion to LIFO are presented below. Income for the Years Ended Sales Less: Cost of goods sold Other expenses Income before taxes Income taxes (40%) Net income Cost of Good Sold and Ending Inventory for the Years Ended Beginning inventory Purchases Cost of goods available Ending inventory Cost of goods sold Determination of Cash at Income taxes under FIFO Income taxes as calculated under LIFO Increase in cash Adjust cash at 12/31/08 for 2007 tax difference Total increase in cash Cash balance under FIFO Cash balance under LIFO 40,000 X $3. 00) (150,000 X $3. 50) (40,000 X $3. 00) 12/31/07 $900,000 525,000 205,000 730,000 170,000 68,000 $102,000 12/31/08 $1,350,000 810,000 304,000 1,114,000 236,000 94,400 $ 141,600 12/31/07 $120,000 525,000 645,000 120,000 $525,000 12/31/07 $ 76,000 68,000 8,000 - 8,000 130,000 $138,000 8-51 (40,000 X $3. 00) (180,000 X $4. 50) (40,000 X $3. 00) 12/31/08 $120,000 810,000 930,000 120,000 $810,000 12/31/08 $110,400 94,400 16,000 8,000 24,000 141,600 $165,600 PROBLEM 8-7 (Continued) Determination of Retained Earnings at Net income under FIFO Net income under LIFO Reduction in retained earnings Adjust retained earnings at 12/31/08 for 2007 reduction Total reduction in retained earnings Retained earnings under FIFO Retained earnings under LIFO 12/31/07 $114,000 102,000 12,000 - 12,000 200,000 $188,000 12/31/08 $165,600 141,600 24,000 12,000 36,000 251,600 $215,600 8-52 PROBLEM 8-8 (a) 1. Ending inventory in units Portable 6,000 + 15,000 – 14,000 = Midsize 8,000 + 20,000 – 24,000 = Flat-screen 3,000 + 10,000 – 6,000 = 7,000 4,000 7,000 18,000 2. Ending inventory at current cost Portable 7,000 X $120 = Midsize 4,000 X $300 Flat-screen 7,000 X $460 = $ 840,000 1,200,000 3,220,000 $5,260,000 3. Ending inventory at base-year cost Portable 7,000 X $100 = Midsize 4,000 X $250 = Flat-screen 7,000 X $400 = $ 700,000 1,000,000 2,800,000 $4,500,000 4. Price index $5,260,000 ? $4,500,000 = 1. 1689 Ending inventory $3,800,000 X 1. 0000 = 700,000* X 1. 168 9 = *($4,500,000 – $3,800,000 = $700,000) 5. $3,800,000 818,230 $4,618,230 6. Cost of goods sold Beginning inventory Purchases [(15,000 X $120) + (20,000 X $300) + (10,000 X $460)] Cost of goods available Ending inventory Cost of goods sold 8-53 $ 3,800,000 2,400,000 16,200,000 4,618,230 $11,581,770 PROBLEM 8-8 (Continued) 7. Gross profit Sales [(14,000 X $150) + (24,000 X $405) + (6,000 X $600)] Cost of goods sold Gross profit $15,420,000 11,581,770 $ 3,838,230 (b) 1. Ending inventory at current cost restated to base cost Portable $ 840,000 ? 1. 20 = $ 700,000 Midsize 1,200,000 ? 1. 20 = $1,000,000 Flat-screen 3,220,000 ? 1. 15 = $2,800,000 Ending inventory Portable $ 600,000 X 1. 00 = 100,000 X 1. 20 = Midsize 1,000,000 X 1. 00 = Flat-screen 1,200,000 X 1. 00 = 1,600,000 X 1. 15 = 2. $ 600,000 120,000 1,000,000 1,200,000 1,840,000 $4,760,000 3. Cost of good sold Cost of good available Ending inventory Cost of goods sold Gross profit Sales Cost of goods sold Gross profit $16,200,000 4,760,000 $11,440,000 4. $15,420,000 11,440,000 $ 3,980,000 8-54 PROBLEM 8-9 (a) Adis Abeba Wholesalers Inc. Computation of Internal Conversion Price Index for Inventory Pool No. 1 Double Extension Method 2006 $595,000 234,000 $829,000 2007 $520,000 320,000 $840,000 Current inventory at current-year cost Product A Product B Current inventory at base cost Product A Product B 17,000 X $35 = 9,000 X $26 = 13,000 X $40 = 10,000 X $32 = 17,000 X $30 = 9,000 X $25 = 510,000 225,000 $735,000 13,000 X $30 = 10,000 X $25 = $390,000 250,000 $640,000 Conversion price index $829,000 ? $735,000 = 1. 13 $840,000 ? $640,000 = 1. 31 (b) Adis Abeba Wholesalers Inc. Computation of Inventory Amounts under Dollar-Value LIFO Method for Inventory Pool No. 1 at December 31, 2006 and 2007 Current Inventory at base cost Conversion price index 1. 00 1. 13 (a) Inventory at LIFO cost $525,000 237,300 $762,300 December 31, 2006 Base inventory 2006 layer ($735,000 – $525,000) Total December 31, 2007 Base inventory 2006 layer (remaining) Total (a) (b) $525,000 210,000 $735,000 (a) $525,000 115,000 $640,000 b) (a) 1. 00 1. 13 (a) $525,000 129,950 $654,950 Per schedule for instruction (a). After liquidation of $95,000 base cost ($735,000 – $640,000). 8-55 PROBLEM 8-10 Base-Year Cost December 31, 2005 January 1, 2005, base December 31, 2005, layer $45,000 11,000 $56,000 Index % 100 115* Dollar-Value LIFO $45,000 12,650 $57,650 December 31, 2006 January 1, 2005, base December 31, 2005, layer December 31, 2006, layer $45,000 11,000 12,400 $68,400 100 115 128** $45,000 12,650 15,872 $73,522 December 31, 2007 January 1, 2005, base December 31, 2005, layer December 31, 2006, layer December 31, 2007, layer 45,000 11,000 12,400 1,600 $70,000 100 115 128 130*** $45,000 12,650 15,872 2,080 $75,602 *$64,500 ? $56,000 **$87,300 ? $68,400 ***$90,800 ? $70 ,000 8-56 PROBLEM 8-11 (a) Schedule A A Current $ 2003 2004 2005 2006 2007 2008 $ 80,000 115,500 108,000 131,300 154,000 174,000 B Price Index 1. 00 1. 05 1. 20 1. 30 1. 40 1. 45 C Base-Year $ $ 80,000 110,000 90,000 101,000 110,000 120,000 D Change from Prior Year - $+30,000 (20,000) +11,000 +9,000 +10,000 Schedule B Ending Inventory-Dollar-Value LIFO: 2003 2004 $ 80,000 $ 80,000 31,500 $111,500 $ 80,000 10,500 $ 90,500 $ 80,000 10,500 14,300 $104,800 8-57 80,000 @ $1. 00 = 30,000 @ 1. 05 = $80,000 @ 1. 00 = 10,000 @ 1. 05 = 2007 $80,000 @ $1. 00 = 10,000 @ 1. 05 = 11,000 @ 1. 30 = 9,000 @ 1. 40 = 2008 $80,000 @ 1. 00 = 10,000 @ 1. 05 = 11,000 @ 1. 30 = 9,000 @ 1. 40 = 10,000 @ 1. 45 = $ 80,000 10,500 14,300 12,600 $117,400 $ 80,000 10,500 14,300 12,600 14,500 $131,900 2005 2006 $80,000 @ 1. 00 = 10,000 @ 1. 05 = 11,000

Rite, Shine, and Recognize

Rite, Shine, and Recognize Rite, Shine, and Recognize Rite, Shine, and Recognize By Maeve Maddox Here are three miscellaneous errors that cropped up in one morning’s batch of letters to the editor in my morning paper. 1. A reader responding to an editorial opposing a proposed state requirement for schools to provide compulsory instruction in cursive handwriting: Your thumbs-down reasoning on the state imposing cursive (a right of passage), and linking that to change vs. â€Å"old† ways, overlooks, as many often do, an important point. The purchase of a plane ticket might be said to confer a â€Å"right of passage.† In the context of the letter, however, the learning of cursive handwriting is viewed by the reader as a significant event in a child’s journey to adulthood. Such a transition from one phase of life to another is a â€Å"rite of passage.† 2. A reader urging the newspaper staff to scrutinize elected officials in order to make their failings public: First, I want to assure you I believe in light being shown on how our elected people are managing their responsibilities. The past form of the verb to shine is shone. The reader believes that light should be shone on elected officials. Note: Some English speakers prefer shined to shone. 3. A reader talking about the way politicians try to hurry the public into making decisions before all the facts are known: There are plenty that oppose this, but most intelligent people realize a railroad when they see one. The verb â€Å"to railroad† is a colloquialism meaning â€Å"to rush or coerce a person or thing in a particular direction or to a particular conclusion.† The noun deriving from this verb is also railroad. It means â€Å"an attempt at hurrying someone into a questionable decision.† The problem here is the use of realize in a context that calls for recognize. The intended meaning is that people are familiar enough with the practice of railroading to know an example of it when they see it. A person could â€Å"realize that they are being railroaded,† but they would â€Å"recognize a railroad when they see it.† recognize verb: to perceive to be the same as something or someone previously known or encountered. Want to improve your English in five minutes a day? Get a subscription and start receiving our writing tips and exercises daily! Keep learning! Browse the Misused Words category, check our popular posts, or choose a related post below:Inquire vs EnquireOne Sheep, Two Sheep, One Fish, Two Fish . . .Word Count and Book Length

Marketing Plan for Kindle Fire Assignment Example | Topics and Well Written Essays - 2000 words

Marketing Plan for Kindle Fire - Assignment Example The main characteristic features of this device are, book reading, blogs, newspapers and all important documents, it mostly supports the portable document format (P.D.F) along with various other formats. Different models have been introduced since the beginning starting from the earlier one, followed by DX in 2009, and now the most recent one being the Kindle Fire. With less than couple of years in market it has made a lot of progress and at the same time it needs to address certain issues, and since after the launch many factors have come to forefront therefore this paper looks at the marketing perspective of Kindle Fire. Kindle fire is seen as a beginning of new era in the world of e-book device from Amazon since its considered as the rival to the Apple’s already in market I-pad .With Fire edition, it was the first time since Amazon introduced colored screens in their e book readers.. It provides access to thousands of movies, over a million books. With help of Premier membership access to lots of free stream material becomes possible. It is being stated as the insurgent that has blown I-pad out of the water. It is being dubbed as I-pad killer and with such a formidable package and features it is certainly going to present a challenge to the existing players in the game.The fire edition would serve as outsider force in the industry since it is totally revamped and a new look to the previous versions of Kindle. It is built on Android operating system and hence a complete infrastructure based kernel running the application programs. It runs on Android 2.3 version of the O.S. It provides a batte ry time of as long as eight hours and supports all three variants of Wi-Fi, that are, b/n/g. It has a dual core processor with clock speed of 1 G-hertz. (McNulty, S. 2011). Financial Statistics: in the category of tablets Apple is the chart leader, but Kindle is not

Question is in the instruction part Essay Example | Topics and Well Written Essays - 2500 words

Question is in the instruction part - Essay Example In relation to architecture, it may be useful to define the concept of ‘Gothic’, which first belonged to the medieval period in Europe, from about 12th to 16th centuries. The characteristics included the pointed arch, large ribbed vaults and large, high windows, and later the flying buttress. The style was applied mainly to churches and cathedrals, therefore having religious and ecclesiastical connotations, though stately homes, convents and monasteries also adopted it. In the late 18th and early 19th centuries, its revival coincided with the popularity of the Gothic genre in English fiction, often quoted as having originated with Horace Walpole’s ‘The Castle of Otranto’ (Walpole 1764). The underlying ethos seems to be one of highly charged emotional content, thrilling sensationalism and a rejection of the rational and classical clarity with determined the Enlightenment. Gothic fiction and architecture would seem to seek to extend beyond normal, ratio nal boundaries in society and to find instead, a more exciting form of expression and stimulation – almost taking reader and characters to the brink of insanity through the alteration of perceived reality. Certainly, the Gothic literary conventions call up childhood fears, myths, legends and superstitions, and in so doing, overturn common perceptions and distort reality. Just as it is impossible to fully understand the workings of the human mind, the environments created in the fiction are difficult to grasp, alien and mysterious and possibly reflecting, in the form of the deep, dark pits and dungeons, an allegorical picture of psychic depths beyond our conscious knowledge. Robert Barry (1995) states that: In ‘The Fall of the House of Usher’, Poe creates an atmosphere of increasing tension and doom, launching into a description which engages the

The field of arts Essay Example for Free

The field of arts Essay Since my childhood years, my passion in the field of arts, music and dance has trained me to focus on my goals and strive for excellence. The skills that I have mastered in playing the flute and violin as well as in dancing were not learned overnight. It took many years of hard work, discipline and determination to perfect my craft but the fulfillment was worth all the efforts that I have given when I performed on stage from the age of 4 to 17 years old and when I won first prize in the art contest when I was 6 years old. In my entry to the University of Southern California, I would apply the same discipline and drive in my studies so I can earn a degree in Business Administration minor in Marketing. In the future, I would like to establish a business related to music and dance and train children and young adults who are aspiring to be musicians, artist or dancers. I will also offer my services to the at-risk youth to keep them away from criminal activities and to help them find meaning to their lives that will lead them to become contributing members of their communities. I plan to turn my passion into a business that is wholeheartedly fulfilling and lived up to the saying of the 18th-century French philosopher, Denis Diderot that, â€Å"only passions, great passions, can elevate the soul to great things†. Being an international student in a foreign country is a challenging experience. However, this will open doors to learn new things, and to meet a lot of people with diverse nationalities and cultures. As I travel and study in a foreign country, my knowledge and exposures in various areas of business will be enhanced and at the same time whenever time permits during summer and holiday breaks, I would like to volunteer my services to the animal shelters and learn about the business of establishing shelter homes for the animals. The United States is one of the major countries that is noted for extending rights and protection to the animals. Establishing a foundation related to worldwide animal shelter is also a passion that I want to pursue after gaining years of work experience and after I have earned a Masters degree in Business Administration. I have heard a lot of abuses and neglect to animals in other countries. I want to be part of a worldwide campaign to end animal abuse and to provide homes to the homeless and abandoned animals. The University of California is noted around the world for its excellent business programs. My studies in the field of business and marketing in the United States will provide me with the extensive knowledge that will help me fully understand the common problems that foreign business people encounter. This will also enable me to establish a network in preparation for my future business plans. Since I have good communication, organization and budgeting skills and love to be with people, I would like to specialize in marketing as I want to understand marketing management, consumer behavior, advertising, product research and development, competitive pricing, promotion and sales so I can effectively serve the needs of my clients. In addition, I would also like to learn about theories and practices of marketing and gain hands-on experience during my studies as the Marshall School of Business recognizes the importance of integrating education with experience. The externship and internship programs will maximize my opportunity for professional development and will provide me with an edge in employment after graduation. The knowledge and experience that I will learn in the university will be applied in my country of birth where I plan to initially work in a company and establish a business and a foundation after getting a better grasp of the industry. This is my short and long term goals and I am determined to reach my goals after completing my studies in the prestigious University of Southern California.

heritage Essay -- essays research papers

Alice Walker, author of The Color Purple, explores in her short story â€Å"Everyday Use† the conflict of class within a family of females through their culture and heritage. This article sponsored by: Click here for All Season Performance Outerwear. Waterproof, windproof, breathable, affordable. Guaranteed. www.FroggToggs.com The story centers around Dee Johnson, her sister, Maggie, and their mother, Mrs. Johnson. Although each possesses the same culture and live in the same environment, Dee chooses to live differently from them. Maggie and Mrs. Johnson are content with living a simple life, through which their heritage signifies pride and usefulness. Not only are they well versed about the family history, but they also utilize the skills that have been passed on to them by their ancestors. Dee, on the other hand, refuses to acknowledge that she is a product of her environment and instead longs for a life built on materialism and pretentiousness. Dee goes off to school and experiences the world outside of the life she has endured with Maggie and their mother. Her nonconformity goes to new heights. On a return visit home, Dee flaunts not only her male companion, but also her new persona that includes a fashionable wardrode, a new attitude, and a new name. Dee has changed her name to Wangero. She has always despised the fact that she was named after relatives, who she claims has oppressed her. Dee felt oppressed by her birth name because every preceding female rela...

In Cold Blood: Creative Writing Essay

My coursework is a short story which includes a diary entry. The diary entry revolves around Lowell Lee Andrews whereas the short story which is in third person deals with Gordon Dale Chappell, the County Sheriff at the time when Andrews killed his family. I have based my coursework on the character of Lowell Lee Andrews who is one of the minor characters in â€Å"In Cold Blood†. Lowell Lee Andrews was on death row with Perry and Dick for murdering his family. I have decided to imagine Andrew’s fantasies of being a crime-lord with the realities of the murders which he commits to his family. Lowell Lee Andrews was zoology major and in the eyes of society, he was a harmless, well mannered, studious and exceptional young boy. He was also cited as being â€Å"the nicest boy in Wolcott†. It can be argued that his life seemed to be complete and content and the murders was a wastage of the lives of himself and his family whereas it can also be argued that he had wasted his entire life in the chains of conformity and delusion. I have tried to explore his psychological state which was believed to have led him to the murders. I also included a third person character that would provide a different perspective to Andrews other than the ones in the novel. â€Å"Entry 73: I dreamt again†¦ Jet-black starry night, the Chevy speeding through the everlasting Chicago skyline, adrenaline escalating throughout my veins as I feel the cold revolver concealed in my pocket. I am seated at the back seat in a dark suit, my hat tilted, my eyes staring dead into the merciless rain. The city belongs to me, as I belong to her. I look into the lights that give life to her, the lights that shine for her, that shine for who we are. People forget who they really should be but they always remember who they are. The Chevy suddenly screeches and slides vigorously on the wet and jagged road till it comes to an abrupt halt in front of the house where I catch a glimpse of them watching a local broadcast in the darkness of the unlit room. I signal the thug to get me the .22 caliber with a nod, and he immediately gets me the rifle as I walk towards them, my hands reaching out to the revolver. The entirety of my body is rigid, my blood rises, I feel exasperated by the heat and I loosen my tie from the choking grip it has on my neck. As I take the rifle from the hands of my thug, I understand this is my way out, my only way out. I am approaching them, my steps slow and constant, and the voices of the monochrome television travel around the room. My neck pulsates, it hinders my breath, my mind corroded with voices, ones which I cannot comprehend but seem to understand. In what feels like a lifetime, the revolver is enfolded in my hands. The room is now lit by fluorescents and I am standing above them waiting, waiting so impatiently to do the deed. As I catch a glimpse of her looking into me, I shoot her point blank and falls ever so gracefully to the floor, lifeless. As time stands still, they rise in horror; I gradually set my aim towards them as they reach out to me, her weak hands trembling, her fingers pointing out to me. I fire towards her, watching her as the bullets pierce through her futile body. She mumbles shattered words to me, I tell her to keep quiet and continue shooting till she can’t mumble anymore. He is now crawling on the floor, heading towards the kitchen. As I rearm, cocking and loading the rifle he tries to hold onto the door, I take my aim and I keep on shooting. I can see the bullets fragments being collected on the wooden floor like drops of rain, smoke coming out of them rising to the cold air disappearing with it. There is no life left in him, but I cannot let myself stop till I am out of ammunition and breath. I head towards the door, stepping over the bodies that lay on the floor and the red stream of the blood that runs throughout the room. I then find myself bound in cold steel handcuffs looking over the Kansas river as the sky cries for me and the crimson tears cleanse what I have done and yet I am left undone. â€Å" As Gordon Dale Chappell closed the diary, he remembered Lowell Lee Andrews, the heavy young kid whose appearance suggested that he wouldn’t even imagine stealing from a drugstore let alone slaughter his own family. It saddened him that Andrew had decided to get rid of his own family and life for something that felt so unreal and out of reach. Andrew’s solemn and exaggerated character made him a topic of constant debate, â€Å"That Andrews kid lost his melons reading all them books. You can’t blame him, a nice boy like him could never do this, wasting his life and the ones whose lives depended on him† It was never really clear on why he did it, and it never would be. After all these years in the department, Gordon Dale Chappell had never been so lost in translation in the complexity and perplexity of human emotion and intention through an inmate. Unlike Andrews who was always so polite and reading his books, Hickock and Smith would sit in the courtroom and joke and look out the window at the pretty girls and act like they didn’t have a care in the world. Gordon found it hard to believe that such a soul could commit such a crime. He could not stop thinking about Andrews and his family, he wondered why, what seemed as such good grace and intentions turn out to be so dangerous that it lead to the wastage of his family’s own lives. When Gordon heard about the execution, he could not stay in the premises as it was too unreal for him to believe that Andrews was to be executed. There stood Andrews, before the hangman’s noose as the falling rain echoed throughout the deafening silence of the hall. He was unmoved and unbothered to what was inevitable. However, just before his final moments of life, he managed to gather a smile. Chappell was told that Lowell Lee Andrews had no last words.

What Is Greed?

When Does Greed Become Too Much? In 2008, employees within a failing firm on Wall Street were given $16 billion in bonuses. That seems outrageous, doesn’t it? Anger was the response of the American people indefinitely. However, if they had done further research they would have realized that the $16 billion in bonuses was merely half of what the company gave out in bonuses during good times. Many of the reporters telling the story discussed the issue of rewarding the greed of the employees with taxpayer money. Which brings us to the question, what exactly is greed?If they would have earned more before, they are expecting the amount that is coming. It is not greed if every year before that the money had been guaranteed, is it? The Merriam-Webster dictionary defines greed as, â€Å"a selfish and excessive desire for more of something than is needed. † ________________________________________________________________________ The word greed dates back to the 1200-1300’ s, where in France it came from the word avarus meaning greedy which was a form of avere meaning to crave or long for.Coming from the word avarus was avaritia which meant just greed and from that word came avarice which meant greed or covetousness (Harper, 1). Covetousness is defined as an envious eagerness to possess something(Merriam-Webster, 2). Greed from the 1600’s to present is a back formation of the word greedy which has many routes and definitions. The West Saxon word graedig or the Anglican word gredig both meant voracious or covetous (Harper, 1). Voracious is defined as wanting to devour great quantities or having a very eager approach to an activity (Merriam Webster).From the Proto-Germanic language were the words graedagaz and graeduz meaning greed and hunger; possibly from the Proto-Indo-European root gher- meaning to want or in Scotland grdh- to be greedy. The origin that the people against the Wall Street bonuses would appreciate the most would be the one from the Greek word phyilargyros meaning â€Å"money-loving† and also the German word for greedy, habsuchtig coming from haben meaning â€Å"to have† +sucht meaning â€Å"sickness, disease† (Harper, 1). The last one is the most interesting because it is suggesting that greed is something than can come and go with the right or wrong stimulants, like a sickness does.What then would one need to do to boost their immune system against this greed? Or is greed something impossible for people to avoid? From the etymology we have found that greed can be related to hunger and envy and the want to have more and more, were these definitions consistent in their use over time? In order to better understand what greed really is we need to take a moment to look back at the history of greed and how often it has occurred throughout the world. In 1527 A. D. the Spaniards had sailed across the Atlantic Ocean and come across the empire of the Incas.They were on their way to the New Wor ld and they came across a raft with a crew of approximately 20 men along with many treasures. After catching a glimpse of the treasure on the raft, the greed of the Spaniards welled up until they decided to conduct an expedition to conquer the Incas’ empire. After many years of getting a crew and resources for this expedition the Spaniards finally headed into the Incas Empire in 1532 A. D. ; fortunately the conquering of the empire was easier due to the civil war of the Incas.The Spaniards took the Incas emperor hostage and in return were offered a room of silver and gold as his ransom. The Spaniards greed continued to get bigger and they took the contents of the room, but did not return the emperor, but instead killed him. The Incan people then revolted under the Spanish control (History World, 1). If the Spaniards and not been so greedy in their desire to take over the empire maybe they could have won over the people as their own; instead they were driven by greed and one m an even named them thieves of the Incan people.Mansio Serra Leguizamon, the last conquistador, said: â€Å"I wish your Your Majesty to understand the motive that moves me to make this statement is the peace of my conscience and because of the guilt I share. For we have destroyed by our evil behavior such a government as was enjoyed by these natives. They were so free of crime and greed, both men and women, that they could leave gold or silver worth a hundred thousand pesos in their open house. So that when they discovered that we were thieves and men who sought to force their wives and daughters to commit sin with them, they despised us. Instances similar to that of the Spaniards and the Incas repeated themselves multiple times throughout history. From the land greed of the Europeans against the people of Africa to the land greed of the Americans against the Native Indians, those nations that progress seem to demonstrate an intense level of greed in order to get to the top. However , while this greed in particular led to the success of those nations demonstrating it there have also been examples where it led to the demise of a dictator or of a group as a whole.For example, Adolf Hitler had already defeated the majority of his European enemies, the last being Great Britain. Hitler had signed a pact two years prior stating that he would not wage war on them, causing the nations to not have armed themselves. Hitler’s decision to break this agreement could only be motivated by his greed to dominate all the other countries; even if Great Britain was ten times the size of his empire. While Nazi Germany had the most powerful military at the time they were not used to the cold weather and were soon overcome by the Soviet Union troops.If Hitler had simply left the Soviet Union alone he might not have been defeated by the allies at all, it was his greed that led to not only his bus his regimes fall. Other examples of the fall of entire nations due to greed includ e the fall of the Roman Empire and the fall of Ancient Greece. A large group of historians have come to the conclusion that the majority of progress in the world is a result of the greed of more powerful nations to become even more powerful. This system is good for those progressing and bad for the smaller, less developed nations who are being taken over.Whether or not greed is moral in this aspect is another argument, but the definition of greed stated previously is most definitely applicable to these historical examples. In the example of the Spaniards and Incas it is greed because the Spaniards already had their own empire across the ocean, however they were driven by the want of more land and of the treasure of the Incas to continue on and take more than was necessary for the nation to survive. Again it seemed unnecessary for the Europeans and the Americans to take the land of the Africans and Native Indians when they already had land elsewhere, it was an unnecessary conquest.In the example of Hitler attacking the Soviet Union, it was greed because he already had a pact with them to be at peace and he broke it because he wanted more. It was not necessary for him to attack the Soviet Union but he did due to greed and the consequence of this was the demise of his regime; the same fall similar to that of the Roman Empire and Ancient Greece. It seems that throughout history the people’s perception of what greed is has remained in line to the definition from the Merriam-Webster Dictionary and this definition is consistent to the past of he word greed, just more detailed than previous definitions. It looks as though there is no way for people to avoid being greedy in its completion, whether it be wanting more candy than you need at Halloween (which was all of us at some point, I’m sure) or wanting extreme amounts of money to be paid to you from work†¦everyone has demonstrated a greedy behavior at least once in their life. This brings about the question, is there a point to where greed becomes too overwhelming?By this I simply mean that you are not likely to hate a three year old dressed in a cowboy costume for asking for more candy when they already have a full bag on Halloween, but you might hate someone who already makes $50,000 to $100,000 a year and is receiving a bonus on top of this pay†¦when their company is failing and is being paid by bail out consisting of your tax payers dollars. Is the three year old just as guilty as the Wall Street firm employee? Most people would say no, the three year old is too young to really understand what greed is.Okay, so what about a six year old or an eight year old or a twelve year old†¦at what age does it become socially unacceptable to act in a greedy fashion? Let’s look at another comparison, but this time between people of an older age group. It’s a bright, sunny day in the city and a married couple is walking down the street when they look down and fi nd an a hundred dollar bill. Instantly the man jumps for joy because he can finally afford some football paraphernalia he had been saving up money on the side for. The husband didn’t even think to ask the wife what she thought they should do with the money.Most people would dismiss this and say, â€Å"Oh, it’s just a hundred dollars for football stuff. Let the man be. † What if the same man worked for AIG and received a ridiculous paycheck and was asking for a bigger bonus at Christmas time to buy football paraphernalia? What’s the difference? It’s still the same man using extra or â€Å"bonus† money to buy the same football paraphernalia, but people tend to freak out when the money is coming from a company that already pays exorbitant amounts for the annual salary and then they give out a bonus in addition to this.According to the definition of greed presented by the Merriam-Webster Dictionary, â€Å" a selfish and excessive desire for mor e of something than is needed,† both men are acting greedy. Both men from the examples are definitely presenting a selfish desire because they are going to use the extra money for themselves and football paraphernalia isn’t necessarily a necessity in everyday life. The issue of greed, similar to that of justice, seems to find its way back to jealousy and morals.What people consider too much greed depends on their view of right and wrong, and how many possessions or how much money they personally have. We may not want to admit this because we think that we have the ability to separate ourselves and judge independently, but the reality is that the majority of people are not able to do this. Sure, they may be able to present a definition-correct response and say that the three year old has bad character and is too greedy, but most people would look over the actions of a mere three year old.They may be able to say that the AIG employee is unable to determine the fate of the economy and has worked hard and deserves the bonus and should be able to do what he wants with it, but deep down they’re jealous of their higher situation and wonder if the AIG employee really deserves such high amounts of money for what they do. As a result of jealousy people tend to claim that others demonstrate too much greed. However if they looked at their own life on a day to day basis would they see that they have been greedy on smaller but much more frequent scales in comparison to the one major instance of the AIG employee?Who is anyone to judge who is too greedy when even the smallest acts of greed are still a greedy action? Maybe everyone is equally corrupt by greed but only large monetary instances are brought into the media in our society. Have we answered the initial question, when does greed become too much? Yes, we have. The common view of people today is that greed is not too much when it is a child asking for more candy on Halloween but it is too much when it is an employee receiving a $16 billion bonus. This can be simplified or abstracted into greed becomes too much when it reaches a larger, noticeable scale.In other words, greed is too much when someone is striving for something less than 10% of the population will attain. If the population had no lower class it was simply middle and higher classes, there would be more people in the higher class and therefore fewer would find greed present because it would seem more attainable. Greed is determined on the basis of what is attainable to the majority of people. Works Cited Merriam-Webster Inc. Merriam-Webster. Merriam-Webster, n. d. Web. 15 Oct. 2012. . Harper, Douglas. â€Å"Online Etymology Dictionary. † Online Etymology Dictionary.N. p. , 2001. Web. 08 Oct. 2012. . â€Å"HISTORY OF THE SPANISH EMPIRE. † HISTORY OF THE SPANISH EMPIRE. N. p. , n. d. Web. 08 Oct. 2012. . Merriam-Webster Inc. â€Å"Greed. † Merriam-Webster. Merriam-Webster, n. d. Web. 08 Oct. 2012. . â€Å"AIG Bonus Payments Controversy. † Wikipedia. Wikimedia Foundation, 10 Apr. 2012. Web. 10 Oct. 2012. .

Free Essays on Gender Wage Gap

As the graduation approaches, most students prepare for the life in so called â€Å"real world†. They are searching for the job, with hope to find what they desire; well-paid job for which they are best qualified. It is assumed that degree of qualification affects the degree of pay, however there are other aspects that have as much effect on the amount earned. One of these aspects is gender. So, even in the year 2001, chances are that I as a female graduate will make less money than the next male graduate whose grade point average was considerably lower than mine. To this day wage gap in gender is present in Canada, but fortunately it is decreasing with time. Woman’s work has always been under appreciated and woman’s capability was hardly ever recognized. It wasn’t until the beginning of 1900s that women joined paid work forces. Ever since than, women have been fighting for equal wages. The average wage rate for female workers has been below that for male workers for as long as statistics have been recorded. â€Å"In 1930,on average women earned about 53% of what men earned in Canada† (Altman and Lamontagne 3). However, in recent years, female wages have been approximately equal to 3/4 of the level of male wages. No one seriously disputes the existence of a gender wage differential. The disagreement primarily focuses on the cause of the wage differential. Is it the result of gender discrimination? Or is it the result of differences in other characteristics that are correlated with gender? â€Å" A study by Jacob Mincer and Solomon Polachek indicates that much of the gender wage difference is the result of differences in educational attainment and work experience. Erica Groshen and others have found that most of the remaining gender wage differential can be explained by differences in occupational choice† (Mackie 259). â€Å"Thus, the empirical evidence indicates that most (or all) of the male-female wage differential is due to g... Free Essays on Gender Wage Gap Free Essays on Gender Wage Gap As the graduation approaches, most students prepare for the life in so called â€Å"real world†. They are searching for the job, with hope to find what they desire; well-paid job for which they are best qualified. It is assumed that degree of qualification affects the degree of pay, however there are other aspects that have as much effect on the amount earned. One of these aspects is gender. So, even in the year 2001, chances are that I as a female graduate will make less money than the next male graduate whose grade point average was considerably lower than mine. To this day wage gap in gender is present in Canada, but fortunately it is decreasing with time. Woman’s work has always been under appreciated and woman’s capability was hardly ever recognized. It wasn’t until the beginning of 1900s that women joined paid work forces. Ever since than, women have been fighting for equal wages. The average wage rate for female workers has been below that for male workers for as long as statistics have been recorded. â€Å"In 1930,on average women earned about 53% of what men earned in Canada† (Altman and Lamontagne 3). However, in recent years, female wages have been approximately equal to 3/4 of the level of male wages. No one seriously disputes the existence of a gender wage differential. The disagreement primarily focuses on the cause of the wage differential. Is it the result of gender discrimination? Or is it the result of differences in other characteristics that are correlated with gender? â€Å" A study by Jacob Mincer and Solomon Polachek indicates that much of the gender wage difference is the result of differences in educational attainment and work experience. Erica Groshen and others have found that most of the remaining gender wage differential can be explained by differences in occupational choice† (Mackie 259). â€Å"Thus, the empirical evidence indicates that most (or all) of the male-female wage differential is due to g...

Definition and Discussion of Classical Rhetoric

Definition and Discussion of Classical Rhetoric Definition The expression classical rhetoric refers to the  practice and teaching of rhetoric in ancient Greece and Rome from roughly the fifth century B.C. to the early Middle Ages. Though rhetorical studies began in Greece in the fifth century B.C., the practice of rhetoric began much earlier with the emergence of Homo sapiens. Rhetoric became a subject of academic study at a time when ancient Greece was evolving from an oral culture to a literate one. See the observations below. Also see: Definitions of Rhetoric in Ancient Greece and RomeAn Overview of Classical Rhetoric: Origins, Branches, Canons, Concepts, and ExercisesRhetoric Review QuestionsDialecticDissoi LogoiGlossary of Rhetorical TermsLetteraturizzazioneOrality Oratory  and  The Parts of a Speech PraxisSophistsStoic GrammarTechneWhat Are the Five Canons of Rhetoric?What Are the Progymnasmata?What Are the Three Branches of Rhetoric? Periods of Western Rhetoric Classical RhetoricMedieval RhetoricRenaissance RhetoricEnlightenment RhetoricNineteenth-Century RhetoricNew Rhetoric(s) Observations [T]he earliest surviving use of the term rhetorike is in Platos Gorgias in the early fourth century BCE. . . . [I]t is likely, although impossible to prove definitively, that Plato himself coined the term.(David M. Timmerman and Edward Schiappa, Classical Greek Rhetorical Theory and the Disciplining of Discourse. Cambridge University Press, 2010) Rhetoric in Ancient GreeceClassical writers regarded rhetoric as having been invented, or more accurately, discovered, in the fifth century B.C. in the democracies of Syracuse and Athens. . . . [T]hen, for the first time in Europe, attempts were made to describe the features of an effective speech and to teach someone how to plan and deliver one. Under democracies citizens were expected to participate in political debate, and they were expected to speak on their own behalf in courts of law. A theory of public speaking evolved, which developed an extensive technical vocabulary to describe features of argument, arrangement, style, and delivery . . . .Classical rhetoriciansthat is, teachers of rhetoricrecognized that many features of their subject could be found in Greek literature before the invention of rhetoric . . .. Conversely, the teaching of rhetoric in the schools, ostensibly concerned primarily with training in public address, had a significant effect on written composition, and thus on literature.(George Kennedy, A New History of Classical Rhetoric. Princeton University Press, 1994) Roman RhetoricEarly Rome was a republic rather than a direct democracy, but it was a society in which public speaking was as important to civic life as it had been in Athens . . ..The ruling elite [in Rome] viewed rhetoric with suspicion, leading the Roman Senate to ban the teaching of rhetoric and close all the schools in 161 BC. Although this move was partially motivated by strong anti-Greek sentiments among the Romans, it is clear that the Senate also was motivated by a desire to eliminate a powerful tool for social change. In the hands of demagogues like the Gracchi, rhetoric had the potential to stir the restless poor, inciting them to riots as part of the endless internal conflicts among the ruling elite. In the hands of skillful legal orators like Lucius Licinius Crassus and Cicero, it had the power to undermine Romes traditionally rigid interpretation and application of law.(James D. Williams, An Introduction to Classical Rhetoric: Essential Readings. Wiley, 2009) Rhetoric a nd WritingFrom its origin in 5th century BC Greece through its flourishing period in Rome and its reign in the medieval trivium, rhetoric was associated primarily with the art of oratory. During the Middle Ages, the precepts of classical rhetoric began to be applied to letter-writing, but it was not until the Renaissance . . . that the precepts governing the spoken art began to be applied, on any large scale, to written discourse.(Edward Corbett and Robert Connors, Classical Rhetoric for the Modern Student. Oxford University Press, 1999) Women in Classical RhetoricThough most historical texts focus on the father figures of classical rhetoric, women (though generally excluded from educational opportunities and political offices) also contributed to the rhetorical tradition in ancient Greece and Rome. Women such as Aspasia and Theodote have sometimes been described as the muted rhetoricians; unfortunately, because they left no texts, we know few details about their contributions. To learn more about the roles played by women in classical rhetoric, see Rhetoric Retold: Regendering the Tradition from Antiquity Through the Renaissance, by Cheryl Glenn (1997); Rhetorical Theory by Women Before 1900, edited by Jane Donawerth (2002); and Jan Swearingens Rhetoric and Irony: Western Literacy and Western Lies (1991). Primary Rhetoric, Secondary Rhetoric, and LetteraturizzazionePrimary rhetoric involves utterance on a specific occasion; it is an act not a text, though subsequently it can be treated as a text. The primacy of pri mary rhetoric is a fundamental fact in the classical tradition: through the time of the Roman Empire teachers of rhetoric, whatever was the real situation of their students, took as their nominal goal the training of persuasive public speakers; even in the early Middle Ages, when there was reduced practical opportunity to exercise civic rhetoric, the definition and content of rhetorical theory as set forth by Isidore and Alcuin, for example, show the same civic assumption; the revival of classical rhetoric in Renaissance Italy was foreshadowed by renewed need for civic rhetoric in the cities of the 12th and 13th centuries; and the great period of neoclassical rhetoric was the time when public speaking emerged as a major force in church and state in France, England, and America.Secondary rhetoric, on the other hand, refers to rhetorical techniques as found in discourse, literature and art forms when those techniques are not being used for an oral, persuasive purpose. . . . Frequent m anifestations of secondary rhetoric are commonplaces, figures of speech, and tropes in written works. Much literature, art and informal discourse is decorated by secondary rhetoric, which may be a mannerism of the historical period in which it is composed. . . .It has been a persistent characteristic of classical rhetoric in almost every stage of its history to move from primary to secondary forms, occasionally then reversing the pattern. For this phenomenon the Italian term letteraturizzazione has been coined. Letteraturizzazione is the tendency of rhetoric to shift focus from persuasion to narration, from civic to personal contexts, and from speech to literature, including poetry.(George Kennedy, Classical Rhetoric and Its Christian and Secular Tradition, 2nd ed. University of North Carolina Press, 1999)