Included in the December? 31, 2016 ?, inventory of the South Town Supply Company
ID: 2525417 • Letter: I
Question
Included in the December? 31, 2016 ?, inventory of the South Town Supply Company are 2,100 deluxe ring binders in the amount of ?$6,145 . An examination of the most recent acquisitions of binders showed the following? costs: January? 26, 2017 ?, 1,800 at $ 2.98 ?each; December? 6, 2016 ?, 1,600 at $ 2.85 ?each; November? 26, 2016 ?, 2,000 at $ 2.57 each.
What is the misstatement in valuation of the December? 31, 2016 ?, inventory for deluxe ring? binders, assuming FIFO inventory? valuation?
What would your answer be if the January? 26, 2017 ?, acquisition was for 1 comma 800 binders at ?$2.62 ?each?
Explanation / Answer
Answer a. Using FIFO Inventory Valuation Inventory on Dec 31, 2016: Date Qty Price Per Unit Total 26-Nov-16 500.00 2.57 1,285.00 6-Dec-16 1,600.00 2.85 4,560.00 Total 2,100.00 5,845.00 As per Valuation (Above) 5,845.00 Shown in Records 6,145.00 Inventory Overstated by 300.00 Answer b. Answer will be the same as above. Since we are making the valuation of Ending Inventory as on Dec 31, 2016.