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EXERCISE6-1

The correctinventoryamount$351000
Endinginventoryphysicalcount.............................................................
$297,000
1. No effecttitlepassesto purchaseruponshipment
whentermsare FOBshippingpoint............................................... 0
2. No effecttitledoesnot transferto Alouuntil
goodsare received...................................................................... 0
3. Addto inventory: Title passedto Alouwhengoods
wereshipped...............................................................................
19,000
4. Addto inventory: Title remainswith Alouuntil
purchaserreceivesgoods.............................................................
35,000
5. No effect title passesto purchaseruponshipment
whentermsare FOBshippingpoint, .........................................................
0
Correctinventory....................................................................................
$351,000
EXERCISE6-10
The endinginventory$26900
Cost Market
Lower
-of-Cost-
or-Market:
Cameras $ 6,800 $ 7,000 $ 6,800
DVDplayers 11,250 10,350 10,350
Ipods 10,000 9,750 9,750
Total inventory $28,050 $27,100 $26,900
EXERCISE6-14
(a) Silver Company GoldCompany
InventoryTurnover $192,000 $292,000
($47,000+ $55,000)/2
= 3.76
($71,000+ $69,000)/2
= 4.17
Daysin 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
PROBLEM6-3A
REFERTO THESCREENSHOTAT THEPAGEENDFORANSWERSAS IN
WILEYPLUS
(a) COSTOF GOODSAVAILABLEFORSALE
Date Explanation Units Unit Cost Total Cost
1/1 BeginningInventory 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) EndingInventory (2) Cost of GoodsSold
Date Units
Unit
Cost
Total Cost Cost of goods
availablefor 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 goodssold $14,200
Proofof Cost of GoodsSold
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) EndingInventory (2) Cost of GoodsSold
Date Units
Unit
Cost
Total Cost Cost of goods
availablefor sale
$19,900
1/1 400 $8 $3,200 Less: Ending
inventory 4,100 2/20 100 9 900
500 $4,100 Cost of goodssold $15,800
Proofof Cost of GoodsSold
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) EndingInventory (2) Cost of GoodsSold
$19,900 2,000= $9.95 Cost of goods
availablefor sale
$19,900
Units
Unit Cost
Total
Cost
Less: Ending
inventory 4,975
500 $9.95 $4,975 Cost of goodssold $14,925
Proofof Cost of GoodsSold
1,500units X 9.95 = $14,925
(c) (1) LIFOresultsin the lowestinventoryamountfor the balancesheet,
$4,100.
(2) FIFOresultsin the lowestcost of goodssold, $14,200.
*Exercise 6-1
Your answer is correct.
Premier Bank and Trust is considering giving Alou Company a loan. Before doing so, management
decides that further discussions with Alous accountant may e desirale. !ne area of particular
concern is the inventory account, which has a year"end alance of #$%&,'''. (iscussions with the
accountant reveal the following.
). Alou sold goods costing #*+,''' to Comerico Company, ,!B shipping point, on (ecemer $+.
The goods are not e-pected to arrive at Comerico until .anuary )$. The goods were not
included in the physical inventory ecause they were not in the warehouse.
$. The physical count of the inventory did not include goods costing #%/,''' that were shipped to
Alou ,!B destination on (ecemer $& and were still in transit at year"end.
*. Alou received goods costing #)%,''' on .anuary $. The goods were shipped ,!B shipping point
on (ecemer $0 y 1rant Co. The goods were not included in the physical count.
2. Alou sold goods costing #*/,''' to 3merick Co., ,!B destination, on (ecemer *'. The goods
were received at 3merick on .anuary +. They were not included in Alou4s physical inventory.
/. Alou received goods costing #22,''' on .anuary $ that were shipped ,!B shipping point on
(ecemer $%. The shipment was a rush order that was supposed to arrive (ecemer *). This
purchase was included in the ending inventory of #$%&,'''.
(etermine the correct inventory amount on (ecemer *).
The correct inventory amount # */)'''
Exercise 6-10
Your answer is correct.
,enton Company applied ,5,! to its inventory and got the following results for its ending inventory.
Cameras )'' units at a cost per unit of #0+
(6( players )/' units at a cost per unit of #&/
iPods )$/ units at a cost per unit of #+'
The cost of purchasing units at year"end was cameras #&', (6( players #0%, and iPods #&+.
(etermine the amount of ending inventory at lower"of"cost"or"market.
The ending inventory
#
26900
Exercise 6-14
The cost of goods sold computations for 7ilver Company and 1old Company are shown
elow.
Silver Company Gold Company
Beginning inventory # 2&,''' # &),'''
Cost of goods purchased $'',''' $%','''
Cost of goods availale for sale $2&,''' *0),'''
3nding inventory //,''' 0%,'''
Cost of goods sold #)%$,''' #$%$,'''
(a)
Your answer is correct.
Compute inventory turnover for each company. (Round answers to 2 decimal places,
e.g. 1.25.)
Silver Company Gold Company
5nventory turnover ratio
3.76 4.17
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(b)
Your answer is correct.
Compute days in inventory for each company. (Round inventory turnover values to 2
decimal places, e.g. 1.25 and final answers to 0 decimal places, e.g. 125.)
Silver Company Gold Company
(ays in inventory
97
days
88
days
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.
*Problem 6-3A
:ilo Company had a eginning inventory of 2'' units of Product ;imo at a cost of #+ per unit.
(uring the year, purchases were<
,e. $' *'' = #% Aug. )$ 0'' = #))
:ay / /'' = #)' (ec. + $'' = #)$
:ilo Company uses a periodic inventory system. 7ales totaled ),/'' units.
*(a)
Your answer is correct.
(etermine the cost of goods availale for sale.
The cost of goods availale for
sale
# )%%''
*(b)
Your answer is correct.
Calculate the weighted"average unit cost. (Round answer to 2 decimal places, e.g. $2.25.)
8eighted"average unit cost # %.%/
Attempts: 1 o! " #sed
Attempts: 1 o! " #sed
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*(c)
Your answer is correct.
(etermine >)? the ending inventory, and >$? the cost of goods sold under each of the assumed
cost flow methods >,5,!, @5,!, and average"cost?. (Round answers to 0 decimal places, e.g.
$2,120.)
$%$& '%$& A(E)AGE-C&S*
The ending inventory # /&'' # 2)'' # 2%&/
The cost of goods
sold
# )2$'' # )/+'' # )2%$/
*(d)
Your answer is correct.
8hich cost flow method results in >)? the lowest inventory amount for the alance sheet, and >$?
the lowest cost of goods sold for the income statementA
>)?
@5,! results in the lowest inventory amount for the alance sheet, # 2)''
.
>$? ,5,! results in the lowest cost of goods sold, # )2$'' .
Attempts: 1 o! " #sed
Attempts: 1 o! " #sed