Exercise 5-13 (20 minutes)
2015 Inventory turnover 2015 Days’ Sales in Inventory
$643,825/[($87,750 + $97,400)/2]
= 7.0 times $97,400/$643,825 x 365 days = 55.2 days
Analysis comment: It appears that during a period of increasing sales, Palmer
Exercise 5-14A (20 minutes)
Ending
Inventory
Cost of
Goods Sold
b. Weighted average ($3,855/1,500 = $2.57)
150 x $2.57 [rounded to cents]..……………………………….. 385.50
$3,855 [Goods Available] – $385.50 [Ending Inventory]............ 3,469.50
d. LIFO
(96 x $2.00) + (54 x $2.25)………….………….…..…... 313.50
(160 x $2.90) + (480 x $2.80) + (544 x $2.50) +
(166 x $2.25)……………….……….…..…..…..…..…. 3,541.50
Exercise 5-15A (20 minutes)
Periodic Inventory
Ending
Inventory
Cost of
Goods Sold
a. Specific Identification
(50 x $2.80) + (10 x $2.00)………….………….…..…... $160.00
$2,540.00 [Goods Available] – $160.00 [Ending Inventory]....... $2,380.00
b. Weighted Average ($2,540.00/1,000 = $2.54)
(60 x $2.54)………………………….…………………..……. 152.40
Exercise 5-16B (20 minutes)
At Cost At Retail
Goods available for sale
Beginning inventory…………………..…..………..….…..… $ 63,800 $128,400
Cost of goods purchased…………………………….……... 115,060 196,800
Goods available for sale…………………………..…………. $178,860 325,200
Exercise 5-17B (20 minutes)
Goods available for sale
Inventory, January 1………………….…………..….…..…..….$ 225,000
Net cost of goods purchased*..……………………………… 802,250
Goods available for sale…………………..………..…..….….1,027,250
Exercise 5-18 (15 minutes)
1. Samsung generally applies the (weighted) average cost assumption when
transit.
2. Under IFRS, Samsung would reverse inventory valuation losses if
inventory values increased in subsequent periods. Specifically, it would
PROBLEM SET A
Problem 5-1A (40 minutes)
1. Compute cost of goods available for sale and units available for sale
Beginning inventory………..…..…..…....100 units @ $50.00 $ 5,000
March 5………………….…..…..…..…..……400 units @ $55.00 22,000
2. Units in ending inventory
3a. FIFO perpetual
Date Goods Purchased Cost of Goods Sold Inventory Balance
Mar. 1 100 @ $50.00 = $5,000
Mar. 5 400 @ $55.00 = $22,000 100 @ $50.00
400 @ $55.00 = $27,000
Mar. 9 100 @ $50.00 = $ 5,000
320 @ $55.00 = $17,600
80 @ $55.00 = $ 4,400
Problem 5-1A (Continued)
3b. LIFO perpetual
Date Goods Purchased Cost of Goods Sold Inventory Balance
Mar. 1 100 @ $50.00 = $ 5,000
Mar. 5 400@ $55.00= $22,000 100 @ $50.00
400 @ $55.00 = $27,000
Mar. 9 400 @ $55.00 = $22,000
20 @ $50.00 = $ 1,000
80 @ $50.00 = $ 4,000
3c. Weighted Average perpetual
Date Goods Purchased Cost of Goods Sold Inventory Balance
Mar. 1 100 @ $50.00 = $ 5,000
Mar. 5 400@ $55.00= $22,000 100 @ $50.00
400 @ $55.00 = $27,000
(avg. = $54.00)
Mar. 9 420 @ $54.00 = $22,680 80 @ $54.00 = $ 4,320
(avg. = $54.00)
$32,248
Problem 5-1A (Concluded)
3d. Specific Identification
Date Goods Purchased Cost of Goods Sold Inventory Balance
Mar. 1 100 @ $50.00 = $ 5,000
Mar. 5 400 @ $55.00 = $22,000 100 @ $50.00
400 @ $55.00 = $27,000
200 @ $62.00 = $23,900
Mar. 29 40 @ $60.00 = $ 2,400
120 @ $62.00 = $ 7,440
20 @ $50.00
60 @ $55.00
80 @ $60.00
80 @ $62.00 = $14,060
$32,540
Specific identification—Alternative Computation
Cost of goods sold—80 units from beginning inventory, 340 units from March 5
purchase, 40 units from March 18 purchase, and 120 units from March 25 purchase
Ending Cost of
Specific Identification Inventory Goods Sold
(80x$50) + (340x$55) + (40x$60) + (120x$62)…..... $32,540
4.
FIFO LIFO
Weighted
Average
Specific
Identifi-
cation
Sales*…………………………..….... $50,900 $50,900 $50,900 $50,900
Less: Cost of goods sold……. 31,800 32,920 32,248 32,540
Problem 5-2A (40 minutes)
1. Compute cost of goods available for sale and units available for sale
Beginning inventory………..…..…..…....100 units @ $50.00 $ 5,000
2. Units in ending inventory
3.
Periodic Inventory
Ending
Inventory
Cost of
Goods Sold
a. FIFO
(200 x $62.00) + (40 x $60.00)………….…….…..…... $14,800.00
(100 x $50.00) + (400 x $55.00) + (80 x $60.00).. . $31,800.00
b. LIFO
(100 x $50.00) + (140 x $55.00)………..……………… $12,700.00
(200 x $62.00) + (120 x $60.00) + (260 x $55.00). $33,900.00
Problem 5-2A (Concluded)
4.
FIFO LIFO
Weighted
Average
Specific
Identifi-
cation
Sales*…………………………..…....$50,900.00 $50,900.00 $50,900.00 $50,900.00
Problem 5-3A (40 minutes)
1. Calculate cost of goods available for sale and units available for sale
Beginning inventory………..…..…..….... 600 units @ $45.00 $27,000
Feb. 10………………………………………….. 400 units @ $42.00 16,800
Mar. 13…………………………..……………… 200 units @ $27.00 5,400
2. Units in ending inventory
Units available (from part 1)…………….…..…....1,800
Problem 5-3A (Continued)
3a. FIFO perpetual
Date Goods Purchasd Cost of Goods Sold Inventory Balance
1/1 600 @ $45.00 = $27,000
2/10 400 @ $42.00= $16,800 600 @ $45.00
400 @ $42.00 = $43,800
3/13 200 @ $27.00= $ 5,400 600 @ $45.00
400 @ $42.00 = $49,200
200 @ $27.00
9/10 200 @ $42.00
200 @ $27.00
100 @ $50.00
100 @ $46.00 = $23,400 400 @ $46.00 = $18,400
$58,800
FIFO Alternate Solution Format
Cost of goods available for sale $77,200
Less: Cost of sales 600 @ $45.00 $27,000
400 @ $42.00 16,800
200 @ $27.00 5,400
100 @ $50.00 5,000
100 @ $46.00 4,600