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QA_Ori:
1. Compute cost of goods available for sale and units available for sale
Beginning inventory 20 units @ $3,000 $ 60,000
April 6 30 units @ $3,500 105,000
2. Units in ending inventory
Units available (from part 1) 65 units
3.
Periodic Inventory
Ending
Inventory
Cost of
Goods Sold
a. FIFO
0
b. LIFO
0
[rounded])
Inventory]
0
d. Specific identification
Inventory]
0
4.
Specific
FIFO LIFO
Weighted
Average
Identifi-cat
ion
Sales* $770,000 $770,000 $770,000.
00
$770,000
Title: Problem 6-3B
QA_Ori:
1. Compute cost of goods available for sale and units available for sale
Beginning inventory 150 units @ $300 $ 45,000
May 6 350 units @ $350 122,500
2. Units in ending inventory
Units available (from part 1) 680 units
3a. FIFO perpetual
Date Goods Purchased Cost of Goods Sold Inventory Balance
May
1
150 @ $300 = $
45,000
May
6
350 @ $350 =
$122,500
150 @ $300
350 @ $350 =
$167,500
3b. LIFO perpetual
Date Goods Purchased Cost of Goods Sold Inventory Balance
May 1 150 @ $300 = $
45,000
May 6 350 @ $350 =
$122,500
150 @ $300
350 @ $350 =
$167,500
3c. Weighted Average perpetual
Date Goods Purchased Cost of Goods Sold Inventory Balance
May 1 150 @ $300 = $
45,000
May 6 350 @ $350 =
$122,500
150 @ $300
350 @ $350 =
$167,500
(avg. = $335)
May 9 180 @ $335 = $
60,300
320 @ $335 =
$107,200
(avg. = $335)
3d. Specific Identification
Date Goods Purchased Cost of Goods Sold Inventory Balance
May 1 150 @ $300 = $
45,000
May 6 350 @ $350 =
$122,500
150 @ $300
350 @ $350 =
$167,500
Specific identification—Alternative Computation
Cost of goods sold—80 units from beginning inventory, 300 [100+200]
units from May 6 purchase, and 100 units from May 25 purchase
Specific Identification Ending Cost of
Inventor
y
Goods
Sold
$174,80
4.
FIFO LIFO
Weighted
Average
Specific
Identifi-cat
ion
Sales* $636,000 $636,000 $636,000 $636,000
5. The manager of Aloha Company likely will prefer the FIFO method
because it would yield the largest gross profit (in this period of rising costs). This
would give the manager the highest bonus based on gross profit.
Title: Problem 6-4B
QA_Ori:
1. Compute cost of goods available for sale and units available for sale
Beginning inventory 150 units @ $300 $ 45,000
May 6 350 units @ $350 122,500
2. Units in ending inventory
Units available (from part 1) 680 units
3.
Periodic Inventory
Ending
Inventory
Cost of
Goods Sold
a. FIFO
0
b. LIFO
0
c. Weighted average ($249,300/680=$366.62
[rounded])
Inventory]
0
d. Specific identification
Inventory]
0
4.
FIFO LIFO
Weighted
Average
Specific
Identifi-cat
ion
Sales* $636,000 $636,000 $636,000 $636,000
*Sales = (180 units x $1,200) + (300 units x $1,400) = $636,000
5. FIFO should be the choice made by the manager of Aloha Company since
FIFO can produce the greatest gross profit. The higher the gross profit, the
higher the bonus manager could earn.
Title: Problem 6-5B
QA_Ori:
Per Unit Total Total LCM Applied
Inventory Items Unit
s
Cos
t
Marke
t
Cost Market to Items
Office furniture
Desks 536 $26
1
$305 $139,8
96
$163,48
0
$139,896
1. Lower of cost or market for inventory applied separately = $580,054
2.
Dec 31 Cost of Goods Sold 30,072
Merchandise Inventory 30,072
Title: Problem 6-6B
QA_Ori:
Part 1
(a)
Cost of goods sold 2012 2013 2014
Reported $ 207,200 $ 213,800 $ 197,030
(b)
Net income 2012 2013 2014
Reported $ 175,800 $ 212,270 $ 184,910
(c)
Total current assets 2012 2013 2014
Reported $ 276,000 $ 277,500 $ 272,950
(d)
Equity 2012 2013 2014
Reported $ 314,000 $ 315,000 $ 346,000
Part 2
Total net income for the combined three-year period ($572,980) is not affected by
Part 3
The overstatement of inventory by $18,000 results in an understatement of cost
of goods sold by that same amount. The $18,000 understatement of cost of
