Problem 6-1C
Requirement 1
Date Transaction
Number
of units
Unit
cost
Ending
Inventory
Jun. 1 Beginning Inventory 1 $ 240 $ 240
Jun. 12 Purchase 5 230 1,150
Jun. 24 Purchase 0 220 0
Jun. 29 Purchase 8 210 1,680
Date Transaction
Number
of units
Unit
cost
Cost of
Goods Sold
Jun. 1 Beginning Inventory 12a$240 $2,880
Jun. 1 Beginning Inventory 3b240 720
Jun. 12 Purchase 8b230 1,840
Jun. 1 Beginning Inventory 1c240 240
Jun. 24 Purchase 14c 220 3,080
a From the June 7 sale; b From the June 15 sale; c From the June 27 sale.
Requirement 2
Date Transaction
Number
of units
Unit
cost
Ending
Inventory
Jun. 24 Purchase 6 $220 $1,320
Jun. 29 Purchase 8 210 1,680
Date Transaction
Number
of units
Unit
cost
Cost of
Goods Sold
Jun. 1 Beginning Inventory 17 $240 $4,080
Jun. 12 Purchase 13 230 2,990
Jun. 24 Purchase 8 220 1,760
a First 38 units purchased are assumed sold
Problems: Set C
Problem 6-1C (concluded)
Requirement 3
Date Transaction
Number
of units
Unit
cost
Ending
Inventory
Jun. 1 Beginning Inventory 14 $240 $3,360
Date Transaction
Number
of units
Unit
cost
Cost of
Goods Sold
Jun. 1 Beginning Inventory 3 $240 $ 720
Jun. 12 Purchase 13 230 2,990
Jun. 24 Purchase 14 220 3,080
Jun. 29 Purchase 8 210 1,680
* Last 38 units purchased are assumed sold
Requirement 4
Date Transaction
Number
of units
Unit
cost
Total
Cost
Jun. 1 Beginning Inventory 17 $240 $ 4,080
Jun. 12 Purchase 13 230 2,990
Jun. 24 Purchase 14 220 3,080
Jun. 29 Purchase 8 210 1,680
Weighted-average cost = $11,830 / 52 units = $227.50.
Ending inventory = 14 units X $227.50 = $3,185
Problem 6-2C
Requirement 1
Date Transaction
Number
of units
Unit
cost
Ending
Inventory
Aug. 11 Purchase 2 $120 $ 240
Aug. 20 Purchase 4 110 440
Aug. 29 Purchase 12 100 1,200
Date Transaction
Number
of units
Unit
cost
Cost of
Goods Sold
Aug. 1 Beginning Inventory 5a$130 $ 650
Aug. 11 Purchase 7b120 840
Aug. 1 Beginning Inventory 2c130 260
Aug. 20 Purchase 8c110 880
a From the August 4 sale; b From the August 13 sale; c From the August 26 sale.
Requirement 2
Date Transaction
Number
of units
Unit
cost
Ending
Inventory
Aug. 20 Purchase 6 $110 $ 660
Aug. 29 Purchase 12 100 1,200
Date Transaction
Number
of units
Unit
cost
Cost of
Goods Sold
Aug. 1 Beginning Inventory 7 $130 $ 910
Aug. 11 Purchase 9 120 1,080
Aug. 20 Purchase 6 110 660
* First 22 units purchased are assumed sold
Problem 6-2C (connued)
Requirement 3
Date Transaction
Number
of units
Unit
cost
Ending
Inventory
Aug. 1 Beginning Inventory 7 $130 $ 910
9 120 1,080
Aug. 11 Purchase 2 110 220
Date Transaction
Number
of units
Unit
cost
Cost of
Goods Sold
Aug. 20 Purchase 10 110 1,100
Aug. 29 Purchase 12 100 1,200
* Last 22 units purchased are assumed sold
Requirement 4
Date Transaction
Number
of units
Unit
cost
Total
Cost
Aug. 1 Beginning Inventory 7 $130 $ 910
Aug. 11 Purchase 9 120 1,080
Aug. 20 Purchase 12 110 1,320
Aug. 29 Purchase 12 100 1,200
Weighted-average cost = $4,510 / 40 units = $112.75
Ending inventory = 18 units X $112.75 = $2,029.50
Cost of goods sold = 22 units X $112.75 = $2,480.50
Problem 6-2C (concluded)
Requirement 5
Specific
Identification FIFO LIFO
Average
Cost
Sales revenue $3,570 $3,570 $3,570 $3,570
Cost of Goods Sold 2,630 2,650 2,300 2,480.50
Requirement 6
FIFO provides the more meaningful measure of ending inventory. The amount of
ending inventory reported using FIFO ($1,860) compared to LIFO ($2,210) be3er
Requirement 7
The LIFO reserve equals the difference in inventory reported using FIFO ($1,860)
versus using LIFO ($2,210). The LIFO reserve equals −$350.
Problem 6-3C
Requirement 1
June 2 Debit Credit
Inventory 2,400
June 4
Inventory 400
June 8
Accounts Payable 600
June 10
Accounts Payable 1,800
Inventory 54
June 11
Accounts Receivable 5,000
Cost of Goods Sold 3,300
June 18
Cash 3,100
Problem 6-3C (connued)
Requirement 1 (concluded)
June 20 Debit Credit
Inventory 3,300
June 23 Debit Credit
Cash 4,800
Cost of Goods Sold 3,200
June 26
Accounts Payable 300
June 28
Accounts Payable 3,000
Cash 2,910
Problem 6-3C (concluded)
Requirement 2
Chow Company
Multiple-step Income Statement (partial)
For the month of June
Net sales $9,800
Cost of goods sold 6,500
Gross profit $3,300
Problem 6-4C
Requirement 1
Inventory items Quantity
Cost
Per unit
Total
Cost
Hammers 110 $ 6.00 $ 660
Saws 60 11.00 660
Screwdrivers 120 3.00 360
Drills 50 22.00 1,100
1-gallon paint cans 150 5.00 750
Requirement 2
Inventory items Quantity
Cost
Per unit
Market
(replacement cost)
per unit
Lower-
of–cost-or-
market Total
Hammers 110 $ 6.00 $ 7.00 $ 6.00 $ 660
Saws 60 11.00 9.00 9.00 540
Screwdrivers 120 3.00 2.00 2.00 240
Drills 50 22.00 21.00 21.00 1,050
1-gal. paint cans 150 5.00 6.00 5.00 750
Requirement 3
Because the total of lower-of-cost-or-market ($4,430) is less than total cost
($4,720), inventory is written down for the difference ($290).
Debit Credit
Cost of Goods Sold 290
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 6-5C
Requirement 1
Date Transaction
Number
of units
Unit
cost
Ending
Inventory
Oct. 4 Purchase 6 $400 $2,400
Date Transaction
Number
of units
Unit
cost
Cost of
Goods Sold
Jan. 1 Beginning inventory 10 $430 $ 4,300
Apr. 9 Purchase 22 470 10,340
a First 44 units purchased are assumed sold
Requirement 2
Date Transaction
Number
of units
Unit
cost
Ending
Inventory
Jan. 1 Beginning Inventory 6 $430 $2,580
Date Transaction
Number
of units
Unit
cost
Cost of
Goods Sold
Jan. 1 Beginning Inventory 4 $430 $ 1,720
Apr. 9 Purchase 22 470 10,340
a Last 44 units purchased are assumed sold
Problem 6-5C (concluded)
Requirement 3
Ending Inventory
Cost Market
Lower of cost
or market
FIFO $2,400a$1,800 $1,800
a Ending inventory from Requirement 1 above.
b Ending inventory from Requirement 2 above.
(a) FIFO Debit Credit
Cost of Goods Sold 600
(b) LIFO
Cost of Goods Sold 780