chapter 6 hw

Chapter 6

Inventory & Cost of Goods Sold

Short Exercises

(10 min.) S 6-1

Billions

Inventory…………………………
3.8

Cash…………………………...

3.8

Accounts Receivable………….
19.7

Sales Revenue……………….

19.7

Cost of Goods Sold……………
4.5

Inventory……………………...

4.5

Cash………………………………
18.8

Accounts Receivable……….

18.8

(10-15 min.) S 6-2

1. (Journal entries)

Inventory…………………………………..
120,000

Accounts Payable…………………….

120,000

Amounts Receivable……………………
150,000

Sales Revenue………………………...

150,000

Cost of Goods Sold……………………..
90,000

Inventory ($120,000 × .75)…………..

90,000

Cash ($150,000 × .30)…………………...
45,000

Accounts Receivable………………...

45,000

2. (Financial statements)

BALANCE SHEET

Current assets:

Inventory ($120,000 − $90,000)……………….
$ 30,000

INCOME STATEMENT

Sales revenue………………………………………
$150,000
Cost of goods sold……………………………….. 90,000 Gross profit…………………………………………
$60,000

(15-20 min.) S 6-3

a b c

Average Cost
FIFO
LIFO
Cost of goods sold:

Average (26 × $154.71)
$4,022.46

FIFO $1,260 + (17 × $160)

$3,980

LIFO $4,000 + (1 × $140)

$4,140

Ending inventory:

Average (8 × $154.71)
$ 1,237.68

FIFO (8 × $160)

$1,280

LIFO (8 × $140)

$1,120

Computations: Units sold = 26 (9 + 25 − 8) Units in ending inventory = 8 Average cost per unit = $154.71 ($1,260 + $4,000) ÷ (9 + 25) Cost per unit: First purchase = $140 ($1,260 ÷ 9 = $140) Second purchase = $160 ($4,000 ÷ 25 = $160)

(10-15 min.) S 6-4

Jefferson’s Copy Center
Income Statement
Year Ended December 31, 2010

Average FIFO LIFO
Sales revenue (580 × $20.25)
$11,745
$11,745
$11,745
Cost of goods sold (580 × $9.70*)
5,626

(92 × $8.90) + (488 × $9.80)

5,601

(580 × $9.80)