Tori Amos Corporation began operations on December 1, 2006

E8-22 (Alternative Inventory Methods—Comprehensive) Tori Amos Corporation began operations on December 1, 2006. The only inventory transaction in 2006 was the purchase of inventory on December 10, 2006, at a cost of $20 per unit. None of this inventory was sold in 2006. Relevant information is as follows.

Ending inventory units
December 31, 2006 100
December 31, 2007, by purchase date
December 2, 2007 100
July 20, 2007 50 150

During the year the following purchases and sales were made:

Purchases Sales
March 15 300 units at $24 April 10 200
July 20 300 units at 25 August 20 300
September 4 200 units at 28 November 18 150
December 2 100 units at 30 December 12 200

The company uses the periodic inventory method.

Determine ending inventory using dollar-value LIFO. Assume that the December 2, 2007, purchase cost is the current cost of inventory. (Hint: The beginning inventory is the base layer priced at $20 per unit.)

Click here for the solution: Tori Amos Corporation began operations on December 1, 2006

Rye Company was formed on December 1, 2010

Jack Sawyer is presently leasing a copier from John Office Equipment Company. The lease requires 11 annual payments of $2,500 at the end of each year and provides the lesser (John) with an 8% return on its investment. You may use the following 8% interest factors:

Future value of 1 1.99900 2.15892 2.33164
Present value of 1 .50025 .46319 .42888
Future value of ordinary annuity of 1 12.48756 14.48656 16.64549
Present value of ordinary annuity of 1 6.24689 6.71008 7.13896
Present value of annuity due of 1 6.74664 7.24689 7.71008

a) Assume the computer has an eleven-year life and will have no salvage value at the expiration of the lease, what was the original cost of the copier to John?

b) What amount would each payment be if the 11 annual payments are to be made at the beginning of each period?


Click here for the solution: Rye Company was formed on December 1, 2010