WEEK 6 SOLUTIONS Exercise 8-1 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
WEEK 6 SOLUTIONS
Exercise 8-1
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
2. To record purchase returns
Accounts payable 600
Inventory 600
3. To record cash sales and cost of goods sold
Cash 5,200
Sales revenue 5,200
Cost of goods sold 2,800
Inventory 2,800
Exercise 8-9
Requirement 1
Purchase price = 1,000 units x $50 = $50,000
July 15, 2013
Purchases 50,000
Accounts payable 50,000
July 23, 2013
Accounts payable 50,000
Cash (98% x $50,000) 49,000
Purchase discounts (2% x $50,000) 1,000
Requirement 2
August 15, 2013
Accounts payable 50,000
Cash 50,000
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 8-13
Cost of goods available for sale:
Beginning inventory (2,000 x $6.10) $12,200
Purchases:
10,000 x $5.50 $55,000
6,000 x $5.00 30,000 85,000
Cost of goods available (18,000 units) $97,200
First in, first out (FIFO)
Cost of goods available for sale (18,000 units) $97,200
Less: Ending inventory (determined below) (15,000)
Cost of goods sold $82,200
Cost of ending inventory:
Date of
purchase Units Unit cost Total cost
August 18 3,000 $5.00 $15,000
Last-in, first-out (LIFO)
Cost of goods available for sale (18,000 units) $97,200
Less: Ending inventory (determined below) (17,700)
Cost of goods sold $79,500
Cost of ending inventory:
Date of
purchase Units Unit cost Total cost
Beg. Inv. 2,000 $6.10 $12,200
August 8 1,000 5.50 5,500
Total $17,700
Exercise 8-13 (concluded)
Average cost
Cost of goods available for sale (18,000 units) $97,200
Less: Ending inventory (determined below) (16,200)
Cost of goods sold $81,000 *
Cost of ending inventory:
$97,200
Weighted-average unit cost = = $5.40
18,000 units
3,000 units x $5.40 = $16,200
* Alternatively, it could be determined by multiplying the units sold by the average
cost: 15,000 units x $5.40 = $81,000
ATTACHMENT PREVIEW
Download attachment
WEEK 6 SOLUTIONS
Exercise 8-1
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
2.
To record purchase returns
Accounts payable.
…………………………………………………………..
600
……………………………………………………………………….
Inventory
………………………………………………………………………………..
600
3.
To record cash sales and cost of goods sold
Cash.
……………………………………………………………………………..
5,200
………………………………………………………………….
Sales revenue
……………………………………………………………………………..
5,200
Cost of goods sold.
………………………………………………………….
2,800
……………………………………………………………………….
Inventory
……………………………………………………………………………..
2,800
Unlock Solution Unlocking…
Exercise 8-9
Requirement 1
Purchase price
=
1,000 units x $50
=
$50,000
July 15, 2013
Purchases.
………………………………………………………………………
50,000
……………………………………………………………
Accounts payable
……………………………………………………………………………
50,000
July 23, 2013
Accounts payable.
…………………………………………………………..
50,000
…………………………………………………………………………
Cash
(98% x $50,000)
……………………………………………………………………………………..
49,000
………………………………………………………
Purchase discounts
(2% x $50,000)
……………………………………………………………………………………..
1,000
Requirement 2
August 15, 2013
Accounts payable.
…………………………………………………………..
50,000
………………………………………………………………………………
Cash
……………………………………………………………………………
50,000
Requirement 3
The July 15 entry would include a debit to the
inventory
account instead of to
purchase
s
, and the
July 23 entry would include a credit to the
inventory
account instead of to
purchase discounts
.
Show entire document
