ACC 557 EXERCISE 6-1  SOLVED

ACC 557 EXERCISE 6-1 SOLVED

 

EXERCISE 6-1 The correct inventory amount $351000 Ending inventory—physical count................................................. $297,000 1. No effect—title passes to purchaser upon shipment when terms are FOB shipping point................................... 0 2. No effect—title does not transfer to Alou until goods are received................................................................. 0 3. Add to inventory: Title passed to Alou when goods were shipped........................................................................... 19,000 4. Add to inventory: Title remains with Alou until purchaser receives goods.................................................... 35,000 5. No effect – title passes to purchaser upon shipment when terms are FOB shipping point, ............................................     0 Correct inventory................................................................................ $351,000 EXERCISE 6-10 The ending inventory $26900 Cost Market Lower -of-Cost- or-Market: Cameras $ 6,800 $ 7,000 $ 6,800 DVD players 11,250 10,350 10,350 Ipods 10,000 9,750 9,750 Total inventory $28,050 $27,100 $26,900 EXERCISE 6-14 (a) Silver Company Gold Company Inventory Turnover $192,000 $292,000 ($47,000 + $55,000)/2 = 3.76 ($71,000 + $69,000)/2 = 4.17 Days in Inventory 365/3.76 = 97 days 365/4.17 = 88 days (b) Gold Company is moving its inventory more quickly, since its inven­tory turnover is higher, and its days in inventory is lower PROBLEM 6-3A REFER TO THE SCREENSHOT AT THE PAGE END FOR ANSWERS AS IN WILEYPLUS (a) COST OF GOODS AVAILABLE FOR SALE Date Explanation Units Unit Cost Total Cost 1/1 Beginning Inventory 400 $ 8 $ 3,200 2/20 Purchase 300 9 2,700 5/5 Purchase 500 10 5,000 8/12 Purchase 600 11 6,600 12/8 Purchase 200 12 2,400 Total 2,000 $19,900 (b) FIFO (1) Ending Inventory (2) Cost of Goods Sold Date Units Unit Cost Total Cost Cost of goods available for sale $19,900 12/8 200 $12 $2,400 Less: Ending inventory 5,700 8/12 300 11 3,300 500 $5,700 Cost of goods sold $14,200 Proof of Cost of Goods Sold Date Units Unit Cost Total Cost 1/1 400 $ 8 $ 3,200 2/20 300 9 2,700 5/5 500 10 5,000 300 11 3,300 1,500 $14,200 (b) LIFO (1) Ending Inventory (2) Cost of Goods Sold Date Units Unit Cost Total Cost Cost of goods available for sale $19,900 1/1 400 $8 $3,200 Less: Ending inventory 4,100 2/20 100 9 900 500 $4,100 Cost of goods sold $15,800 Proof of Cost of Goods Sold Date Units Unit Cost Total Cost 12/8 200 $12 $ 2,400 8/12 600 11 6,600 5/5 500 10 5,000 2/20 200 9 1,800 1,500 $15,800 AVERAGE-COST (1) Ending Inventory (2) Cost of Goods Sold $19,900 ÷ 2,000 = $9.95 Cost of goods available for sale $19,900 Units Unit Cost Total Cost Less: Ending inventory 4,975 500 $9.95 $4,975 Cost of goods sold $14,925 Proof of Cost of Goods Sold 1,500 units X 9.95 = $14,925 (c) (1) LIFO results in the lowest inventory amount for the balance sheet, $4,100. (2) FIFO results in the lowest cost of goods sold, $14,200.
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