Beruflich Dokumente
Kultur Dokumente
Exercise 81
1. To record the purchase of inventory on account and the
payment of freight charges.
Inventory......................................................................... 5,000
............................................................Accounts payable
...............................................................................5,000
Inventory......................................................................... 300
................................................................................Cash
..................................................................................300
Cash................................................................................ 5,200
..................................................................Sales revenue
...............................................................................5,200
Purchases........................................................................ 5,000
............................................................Accounts payable
...............................................................................5,000
Freight-in........................................................................ 300
................................................................................Cash
..................................................................................300
Cash................................................................................ 5,200
..................................................................Sales revenue
...............................................................................5,200
Requirement 2
Freight
Inventory 10 Freight-in 10
Cash 10 Cash 10
Returns
Accounts payable 12 Accounts payable 12
Inventory 12 Purchase returns 12
Sales
Accounts receivable 250 Accounts receivable 250
Sales revenue 250 Sales revenue 250
End of period
No entry Cost of goods sold (below) 148
Inventory (ending) 30
Purchase returns 12
Inventory (beginning) 25
Purchases 155
Freight-in 10
2016:
(1) Cost of goods available for sale Net purchases = Beginning
inventory
876 (630 18 24 + 13) = 275 = Beginning inventory
(2) Cost of goods available for sale Cost of goods sold = Ending
inventory
876 627 = 249 = Ending inventory
2017:
(3) 2017 beginning inventory = 2016 ending inventory = 249
(4) Cost of goods sold + Ending inventory = Cost of goods available for
sale
621 + 225 = 846 = Cost of goods available for sale
2018:
(6) Cost of goods available for sale Ending inventory = Cost of goods
sold
800 216 = 584 = Cost of goods sold
Exercise 85 (concluded)
Exercise 87
Inventory balance before additional transactions $210,000
Add:
4. Merchandise on consignment with Joclyn Corp. 15,000
Deduct:
1. Merchandise shipped to Raymond f.o.b. destination on
December 26 (30,000)
2. Merchandise held on consignment from the Harrison
Company (14,000)
Correct inventory balance $181,000
Exercise 88
1. Excluded
2. Included
3. Included
4. Excluded
5. Included
6. Excluded
7. Included
Exercise 89
Requirement 1
Requirement 2
Requirement 3
The July 15 entry would include a debit to the inventory account instead of to
purchases, and the July 23 entry would include a credit to the inventory account
instead of to purchase discounts.
Exercise 810
Requirement 1
Requirement 2
Requirement 3
The July 15 entry would include a debit to the inventory account instead of to
purchases.
Exercise 811
Requirement 1
Purchases: $500 x 70% = $350 per unit.
100 units x $350 = $35,000
Requirement 2
Requirement 3
Requirement 1:
Requirement 2:
Date of
purchase Units Unit cost Total cost
August 18 3,000 $5.00 $15,000
Average cost
Date of Cost of
Sale Units Sold Units Sold Total Cost
6,000 @ $5.00
Ending
inventory
Total cost of goods sold = $79,500
Exercise 814 (concluded)
(Note: the perpetual inventory LIFO results in this exercise are the same as
periodic LIFO results, due to the timing of sales and purchases. The same LIFO
layers are on hand at the end of the period under each method. This is unusual.
LIFO perpetual and LIFO periodic normally produce different results for ending
inventory and cost of goods sold.)
Average cost
Date Purchased Sold Balance
Available
$67,200
=
$5.60/unit
12,000 units
Available
$52,400
=
$5.24/unit
10,000 units
August 25 7,000 @ $5.24 = 3,000 @ $5.24
$36,680 $15,720
Ending
inventory
Total cost of goods sold = $81,480
Exercise 815
Requirement 1
LIFO will result in the highest cost of goods sold figure because both the cost
of merchandise and the quantity of merchandise rose during the period. FIFO will
result in the highest ending inventory balance for the same reasons.
Requirement 2
Cost of goods available for sale:
Beginning inventory (600 x $80) $ 48,000
Purchases:
1,000 x $ 95 $95,000
800 x $100 80,000 175,000
Cost of goods available (2,400 units)
$223,000
Exercise 816
Requirement 1
Cost of goods available for sale:
Beginning inventory (5,000 x $10.00) $ 50,000
Purchases:
3,000 x $10.40 $31,200
8,000 x $10.75 86,000 117,200
$167,200
Weighted-average unit cost = = $10.45
16,000 units
Requirement 2
$81,200
Available
=
$10.15/unit
8,000 units
$126,600
Available
=
$10.55/unit
12,000 units
September 5,000 @ $10.55 = 7,000 @ $10.55
29 $52,750 $73,850
Ending
inventory
Total cost of goods sold = $93,350
Exercise 817
Requirement 1
FIFO cost of goods sold:
Requirement 2
LIFO cost of goods sold:
$115,000
= $5.75 per unit
20,000 units
$180,000
= $6 = Cost per unit of year 2016
purchases
30,000 units purchased
Requirement 2
Requirement 2
When inventory quantity declines during a reporting period, liquidation of
LIFO inventory layers carried at different costs prevailing in prior years results in
noncurrent costs being matched with current selling prices. If the resulting effect
on income is material, it must be disclosed. In this case, the effect of the LIFO
layer liquidation is to increase income (ignoring taxes) by $6,000 [4,000 units
liquidated x $1.50 ($8.50 current year cost per unit $7 LIFO layer cost per
unit)].
Exercise 820
Units liquidated 10,000
Units liquidated multiplied by the difference between
their current cost and acquisition cost:
8,000 x ($12 9) = $24,000
2,000 x ($12 8) = 8,000
Before-tax LIFO liquidation profit $32,000
Exercise 821
Requirement 2
The specific citation that describes the disclosure requirements that must be
made by publicly traded companies for a LIFO liquidation is FASB ASC 33010
S993: InventoryOverallSEC MaterialsLIFO Liquidations.
Requirement 3
When a company using LIFO liquidates a substantial portion of its LIFO
inventory and as a result includes a material amount of income in its income
statement that otherwise would not have been recorded, it must disclose the
amount of income realized as a result of the inventory liquidation.
Such disclosure would be required in order to make the financial statements
not misleading. Disclosure may be made either in a footnote or parenthetically on
the face of the income statement.
Exercise 822
($ in millions)
The gross profit ratios for the two companies are similar and both slightly
exceed the industry average of 33%. On average, Lowes turns over its inventory
16 days slower than does Home Depot and both companies turn over their
inventories faster than the industry average. This is not surprising, since Home
Depot and Lowes lead the market in size of stores and merchandise available,
making it more difficult for smaller retailers to sell merchandise as quickly as these
two companies.
Exercise 823
Ending
Date at Base Year Cost at Base Year Cost Converted to Cost DVL
Cost
1/1/16 $660,000
= $660,000 $660,000 (base) $660,000 x 1.00 = $660,000
$660,000
1.00
12/31/16 $690,000
12/31/17 $760,000
Date at Base Year Cost at Base Year Cost Converted to Cost DVL
Cost
12/31/16 $200,000
1.00
12/31/17 $231,000
Index
12/31/18 $299,000
Index
12/31/19 $300,000
Index
Date at Base Year Cost at Base Year Cost Converted to Cost DVL
Cost
12/31/16 $720,000
_______
= $720,000 $720,000 (base) $720,000 x 1.00= $720,000 $720,000
1.00
12/31/16 $880,000
_______
= $800,000 $720,000 (base) $720,000 x 1.00 = $720,000
2. c. Under the net method, purchases are recorded net of the discount:
$3,600 x 98% = $3,528