15
Accounting for
2. Merchandise inventory and cost of goods sold
4. We record a sale at retail as well as the cost of the merchandise sold. We debit
5. The subsidiary ledger keeps track of the details of quantities and cost for each item in
inventory.
7. Specific Invoice. Actual costs of ending inventory known. Weighted-Average. Average
8. LIFO.
10. The buyer still has title; thus, the goods in transit as well as items on consignment are
added to inventory valuations.
12. Retail method is often used to estimate ending inventory for interim reports. Gross profit
13. Before switching back, the President should completely look at why the system is not
SOLUTIONS TO CONCEPT CHECKS
Account Category
1.
Accounts Receivable
Asset
Sales
Revenue
Cost of Goods Sold
Cost
Merchandise Inventory
Asset
2.
GENERAL JOURNAL
Date
201X
Account Titles and Description
PR
Dr.
Cr.
April
1
Accounts Receivable
1
1
8
0
00
Sales
1
1
8
0
00
1
Cost of Goods Sold
7
4
0
00
Merchandise Inventory
7
4
0
00
3.
GENERAL JOURNAL
Date
201X
Account Titles and Description
PR
Dr.
Cr.
Mar.
15
Sales Returns and Allowances
1
8
0
00
Cash
1
8
0
00
15
Merchandise Inventory
7
0
00
Cost of Goods Sold
7
0
00
4.
GENERAL JOURNAL
Date
201X
Account Titles and Description
PR
Dr.
Cr.
Mar
20
Accounts Payable
3
6
0
00
Merchandise Inventory
3
6
0
00
Copyright © 2016 Pearson Education, Inc.
15-3
CONCEPT CHECKS (CONTINUED)
5.
(a) FIFO
(b) LIFO
(c) Weighted-Average
Cost of good available for sale
$ 81
$ 81
$ 81
Less: Ending inventory
32
36
34
Cost of goods sold
$ 49
$ 45
$ 47
6.
Cost
Retail
Goods Available for Sale
Beginning Inventory
$ 56
$ 112
Net Purchases
33
71
Cost of Goods Available for Sale
89
183
Cost Ratio
0.49
Net Sales at Retail
126
Ending Inventory at Retail
$ 57
Ending Inventory
$ 28
7.
Goods Available for Sale
Inventory, January 1, 201X
$ 69
Net Purchases
16
Cost of Goods Available for Sale
$ 85
Less: Estimated Cost of Goods Sold:
Net Sales at Retail
$ 47
Cost Percentage
73%
Estimated Cost of Goods Sold
34
Estimated Inventory, January 31, 201X
$ 51
15A-1.
SOLUTIONS TO SET A EXERCISES
Date
201X
Feb.
3
Merchandise Inventory
2
0
0
0
00
Accounts Payable, Solar Electric
2
0
0
0
00
Purchased 50 Model 77DX
5
Cash
2
8
0
00
Sales
2
8
0
00
Sold 10 Model U67
5
Cost of Goods Sold
1
8
0
00
Merchandise Inventory
1
8
0
00
6
Sales Returns and Allowances
5
6
00
Cash
5
6
00
Customer Returned 2 Model U67
6
Merchandise Inventory
3
6
00
Cost of Goods Sold
3
6
00
10
Accounts Payable, Solar Electric
8
0
00
Merchandise Inventory
8
0
00
Debit Memo – Returned 2 Model 77 DX
EXERCISES (CONTINUED)
15A-3 Page 1
Date
201X
Account Titles and Description
PR
Dr.
Cr.
Nov.
5
Merchandise Inventory
114
130
00
Accounts Payable
201
130
00
Purchased 13 units @ $10 each
6
Cash
111
109
90
Sales
401
109
90
Sold 7 units
6
Cost of Goods Sold
501
70
00
Merchandise Inventory
114
70
00
7
Cash
111
15
70
Sales
401
15
70
Sold 1 unit
7
Cost of Goods Sold
501
10
00
Merchandise Inventory
114
10
00
10
Merchandise Inventory
114
120
00
Accounts Payable
201
120
00
Purchased 12 units @ $10 each
EXERCISES (CONTINUED)
15A-4.
Inventory Item 44BX
Date
201X
Received
Sold
Balance
Units
Cost
Total
Units
Cost
Total
Units
Cost
Total
Nov. 1
5
20.00
$100.00
2
9
23.00
207.00
5
20.00
9
23.00
307.00
5
2
20.00
40.00
3
20.00
9
23.00
267.00
6
3
20.00
60.00
8
23.00
184.00
1
23.00
23.00
8
10
26.00
260.00
1
23.00
10
26.00
283.00
15A-5.
(a) FIFO
(b) LIFO
(c) Weighted-Average
Cost of good available for sale
$ 1,461
$ 1,461
$ 1,461
Less: Ending inventory
643
420
542
Cost of goods sold
$ 818
$ 1,041
$ 919
EXERCISES (CONTINUED)
15A-6.
The cost of inventory for Ann Company is $27,830.
15A-7. Retail Method
Goods Available for Sale
Cost
Retail
Beginning Inventory
$ 60,100.00
$ 74,100.00
Net Purchases
256,600.00
406,000.00
Cost of Goods Available for Sale
$316,700.00
$480,100.00
Cost Ratio 65.97%
Net Sales at Retail
226,200.00
Ending Inventory at Retail
$253,900.00
Ending Inventory at Cost
$167,497.83
15A-8. Gross Profit Method
Goods Available for Sale
Inventory, September 1, 201X
$30,000.00
Net Purchases
67,900.00
Cost of Goods Available for Sale
$97,900.00
Less: Estimated Cost of Goods Sold:
Net Sales
$108,000.00
Cost Percentage
58%
Estimated Cost of Goods Sold
62,640.00
Estimated Inventory September 30, 201X
$35,260.00
15B-1.
SOLUTIONS TO SET B EXERCISES
Date
201X
Feb.
3
Merchandise Inventory
1
0
0
0
00
Accounts Payable, Flashing Electric
1
0
0
0
00
Purchased 25 Model 77DX
5
Cash
1
6
8
00
Sales
1
6
8
00
Sold 6 Model U67
5
Cost of Goods Sold
1
0
8
00
Merchandise Inventory
1
0
8
00
6
Sales Returns and Allowances
5
6
00
Cash
5
6
00
Customer Returned 2 Model U67
6
Merchandise Inventory
3
6
00
Cost of Goods Sold
3
6
00
10
Accounts Payable, Flashing Electric
2
8
0
00
Merchandise Inventory
2
8
0
00
Debit Memo – Returned 7 Model 77 DX
EXERCISES (CONTINUED)
15B-3 Page 1
Date
201X
Account Titles and Description
PR
Dr.
Cr.
Nov.
5
Merchandise Inventory
114
80
00
Accounts Payable
201
80
00
Purchased 8 units @ $10 each
6
Cash
111
16
20
Sales
401
16
20
Sold 1 unit
6
Cost of Goods Sold
501
10
00
Merchandise Inventory
114
10
00
7
Cash
111
94
20
Sales
401
94
20
Sold 6 units
7
Cost of Goods Sold
501
60
00
Merchandise Inventory
114
60
00
10
Merchandise Inventory
114
210
00
Accounts Payable
201
210
00
Purchased 21 units @ $10 each
EXERCISES (CONTINUED)
15B-4.
Inventory Item 44BX
Date
201X
Received
Sold
Balance
Units
Cost
Total
Units
Cost
Total
Units
Cost
Total
Jan 1
6
19.50
117.00
2
14
21.00
294.00
6
19.50
14
21.00
411.00
5
2
19.50
39.00
4
19.50
14
21.00
372.00
6
4
19.50
78.00
8
21.00
168.00
6
21.00
126.00
8
5
23.00
115.00
6
21.00
5
23.00
241.00
15B-5.
(a) FIFO
(b) LIFO
(c) Weighted-Average
Cost of good available for sale
$ 2,586
$ 2,586
$ 2,586
Less: Ending inventory
1,091
863
986
Cost of goods sold
$ 1,495
$ 1,723
$ 1,600