Problem 6-1A (concluded)
Requirement 3 LIFO
Date Transaction
Number
of units
Unit
Cost
Ending
Inventory
Oct. 1 Beginning inventory 6 $900 $5,400
Date Transaction
Number
of units
Unit
Cost
Cost of
Goods Sold
Oct. 10 Purchase 3 $910 $ 2,730
Oct. 20 Purchase 4 920 3,680
a Last 14 units purchased are assumed sold
Requirement 4 Weighted average
Date Transaction
Number
of units
Unit
cost
Total
Cost
Oct. 1 Beginning inventory 6 $900 $ 5,400
Oct. 10 Purchase 5 910 4,550
Oct. 20 Purchase 4 920 3,680
Weighted-average cost = $20,140 / 22 units = $915.45 (rounded)
Ending inventory = 8 units × $915.45 = $7,323.60
Problem 6-2A (LO 6-3, 6-4, 6-5)
Requirement 1 Specific identification
Date Transaction
Number
of units
Unit
cost
Ending
Inventory
Mar. 1 Beginning inventory 1 $250 $ 250
Mar. 9 Purchase 2 270 540
Mar. 22 Purchase 2 280 560
Date Transaction
Number
of units
Unit
cost
Cost of
Goods Sold
Mar. 1 Beginning inventory 15a$250 $3,750
Mar. 9 Purchase 8b270 2,160
Mar. 1 Beginning inventory 4c250 1,000
a From the March 5 sale; b From the March 17 sale; c From the March 27 sale.
Requirement 2 FIFO
Date Transaction
Number
of units
Unit
cost
Ending
Inventory
Mar. 22 Purchase 5 $280 $1,400
Mar. 30 Purchase 9 300 2,700
Date Transaction
Number
of units
Unit
cost
Cost of
Goods Sold
Mar. 1 Beginning inventory 20 $250 $5,000
Mar. 9 Purchase 10 270 2,700
Mar. 22 Purchase 5 280 1,400
a First 35 units purchased are assumed sold
Problem 6-2A (connued)
Requirement 3 LIFO
Date Transaction
Number
of units
Unit
cost
Ending
Inventory
Mar. 1 Beginning inventory 14 $250 $3,500
Date Transaction
Number
of units
Unit
cost
Cost of
Goods Sold
Mar. 1 Beginning inventory 6 $250 $1,500
Mar. 9 Purchase 10 270 2,700
Mar. 22 Purchase 10 280 2,800
Mar. 30 Purchase 9 300 2,700
a Last 35 units purchased are assumed sold
Requirement 4 Weighted average
Date Transaction
Number
of units
Unit
cost
Total
Cost
Mar. 1 Beginning inventory 20 $250 $ 5,000
Mar. 9 Purchase 10 270 2,700
Mar. 22 Purchase 10 280 2,800
Mar. 30 Purchase 9 300 2,700
Weighted-average cost = $13,200 / 49 units = $269.3878 (rounded)
Ending inventory = 14 units × $269.3978 = $3,771.43
Problem 6-2A (concluded)
Requirement 5
Specific
Identification FIFO LIFO
Weighted-ave
rage
Cost
Sales revenue $15,300 $15,300 $15,300 $15,300.00
Cost of goods sold 9,150 9,100 9,700 9,428.57
Requirement 6
FIFO provides the more meaningful measure of ending inventory. The amount of
ending inventory reported using FIFO ($4,100) compared to LIFO ($3,500) be1er
Requirement 7
March 31 Debit Credit
Cost of Goods Sold 600
* The LIFO adjustment equals the difference in inventory reported using FIFO
($4,100) versus using LIFO ($3,500). The LIFO adjustment equals $600.
Problem 6-3A (LO 6-2, 6-5)
Requirement 1
July 3 Debit Credit
Inventory 2,300
July 4
Inventory 110
July 9
Accounts Payable 200
July 11
Accounts Payable 2,100
Inventory 21
July 12
Accounts Receivable 5,800
Cost of Goods Sold 3,000
Problem 6-3A (concluded)
Requirement 1 (con5nued)
July 18 Debit Credit
Inventory 3,100
July 22
Cash 4,200
Cost of Goods Sold 2,500
July 28
Accounts Payable 300
July 30
Accounts Payable 2,800
Requirement 2
CD City
Multiple-step Income Statement (partial)
For the month of July
Net sales $10,000
Cost of goods sold 5,500
Gross profit $ 4,500
Problem 6-4A (LO 6-6)
Requirement 1
Inventory
items Quantity
Cost
Per unit
Total
Cost
Vans 4 $27,000 $108,000
Trucks 7 18,000 126,000
2-door sedans 3 13,000 39,000
4-door sedans 5 17,000 85,000
Sports cars 1 37,000 37,000
SUVs 6 30,000 180,000
Requirement 2
Inventory
items Quantity
Cost
Per unit
Market
(replacement cost)
per unit
Lower of
cost or
market Total
Vans 4 $27,000 $25,000 $25,000 $100,000
Trucks 7 18,000 17,000 17,000 119,000
2-door sedans 3 13,000 15,000 13,000 39,000
4-door sedans 5 17,000 20,000 17,000 85,000
Sports cars 1 37,000 40,000 37,000 37,000
SUVs 6 30,000 28,000 28,000 168,000
Requirement 3
Because the total of lower of cost or market ($548,000) is less than total cost
($575,000), inventory is written down for the difference ($27,000).
Debit Credit
Cost of Goods Sold 27,000
Requirement 4
The write-down of inventory from cost to market value reduces total assets and
increases total expenses, leading to lower net income and lower retained earnings.
Problem 6-5A (LO 6-3, 6-6)
Requirement 1 FIFO
Date Transaction
Number
of units
Unit
cost
Ending
Inventory
Mar. 12 Purchase 40 $16 $ 640
Sep. 17 Purchase 60 9 540
Date Transaction
Number
of units
Unit
Cost
Cost of
Goods Sold
Jan. 1 Beginning inventory 120 $21 $2,520
Mar. 12 Purchase 50 16 800
a First 170 units purchased are assumed sold
Requirement 2 LIFO
Date Transaction
Number
of units
Unit
cost
Ending
Inventory
Date Transaction
Number
of units
Unit
cost
Cost of
Goods Sold
Jan. 1 Beginning inventory 20 $21 $ 420
Mar. 12 Purchase 90 16 1,440
a Last 170 units purchased are assumed soldProblem 6-5A (concluded)
Requirement 3
Ending Inventory
Cost Market
Lower-of-cost-
or-market
FIFO $ 1,180a$500 $500
a Ending inventory from Requirement 1 above.
b Ending inventory from Requirement 2 above.
(a) FIFO Debit Credit
Cost of Goods Sold 680
(b) LIFO
Cost of Goods Sold 1,600
Problem 6-6A (LO 6-2, 6-3, 6-4, 6-5, 6-6)
Requirement 1
October 4 Debit Credit
Inventory 6,500
October 5
Inventory 600
October 9
Accounts Payable 500
October 12
Accounts Payable 6,000
Inventory 120
Cost of Goods Sold 8,440
Inventory 8,440
October 19
Cash 12,800