1. Kemper Company signed a long term noncancelable purchase commitment with a major supplier to purchase raw materials in 2013 at a cost of $1,000,000. At December 31, 2012, the raw materials to be purchased have a market value of $950,000. Prepare any necessary December 31, 2012, entry.
2. Use the information for Kemper Company from BE9 5. In 2013, Kemper paid $1,000,000 to obtain the raw materials which were worth $950,000. Prepare the entry to record the purchase.
3. Fosbre Corporation’s April 30 inventory was destroyed by fire. January 1 inventory was $150,000, and purchases for January through April totaled $500,000. Sales for the same period were $700,000. Fosbre’s normal gross profit percentage is 35% on sales. Using the gross profit method, estimate Fosbre’s April 30 inventory that was destroyed by fire.
4. Boyne Inc. had beginning inventory of $12,000 at cost and $20,000 at retail. Net purchases were $120,000 at cost and $170,000 at retail. Net markups were $10,000; net markdowns were $7,000; and sales were $147,000. Compute ending inventory at cost using the conventional retail method.
5. In its 2010 annual report, Wal Mart reported inventory of $33,160 million on January 31, 2010, and $34,511 million on January 31, 2009, cost of sales of $304,657 million for fiscal year 2010, and net sales of $405,046 million. Compute Wal Mart’s inventory turnover and the average days to sell inventory for the fiscal year 2010.