Type
Solution Manual
Book Title
Financial Accounting Fundamentals 5th Edition
ISBN 13
978-0078025754

978-0078025754 Chapter 5 Solution Manual Part 2

March 26, 2020
Exercise 5-7 (20 minutes)
a. FIFOPerpetual
Date
Goods Purchased
Cost of Goods Sold
Inventory Balance
1/1
200 @ $10
= $ 2,000
b. LIFOPerpetual
Date
Goods Purchased
Cost of Goods Sold
Inventory Balance
1/1
200 @ $10
= $ 2,000
1/10
150 @ $10 = $ 1,500
50 @ $10
= $ 500
Exercise 5-7 (Concluded)
Alternate Solution Format
Ending Cost of
Inventory Goods Sold
a. FIFO
(100 x $25) + (120 x $20) ......................................................... $4,900
FIFO Gross Margin
LIFO Gross Margin
Exercise 5-8 (15 minutes)
a. Specific Identification methodCost of goods sold
Cost of goods available for sale .............................................
$18,750
Ending inventory under specific identification
Exercise 5-9A (20 minutes)
Cost of goods available for sale = $18,750 (given in Exercise 5-7)
Ending Cost of
Periodic Inventory System Inventory Goods Sold
a. FIFOPeriodic
(100 x $25) + (120 x $20) ............................................ $4,900
(200 x $10) + (350 x $15) + (330 x $20) ..................... $13,850
b. LIFOPeriodic
Exercise 5-10 (15 minutes)
Per Unit
Total
Total
LCM Applied
to Items
Inventory Items
Units
Cost
Market
Cost
Market
Helmets ...........
24
$50
$54
$1,200
$1,296
$1,200
Exercise 5-11 (20 minutes)
1. a. LIFO ratio computations
LIFO current ratio (2015) = $220/$200 = 1.1
LIFO inventory turnover (2015) = $740/ [($110+$160)/2] = 5.5
2. The use of LIFO versus FIFO for Cruz markedly impacts the ratios computed.
Specifically, LIFO makes Cruz appear worse in comparison to FIFO numbers
on the current ratio (1.1 vs. 1.5) but better on inventory turnover (5.5 vs. 3.8)
Exercise 5-12 (25 minutes)
1. Correct gross profit = $850,000 - $500,000 = $350,000 (for each year)
2. Reported income figures
Year 2014
Year 2015
Year 2016
Sales ..................................
$850,000
$850,000
$850,000
Exercise 5-13 (20 minutes)
2014 Inventory turnover 2014 Days' Sales in Inventory
2015 Inventory turnover 2015 Days' Sales in Inventory
Analysis comment: It appears that during a period of increasing sales, Palmer
Exercise 5-14A (20 minutes)
Ending
Inventory
Cost of
Goods Sold
a. Specific identification
(50 x $2.90) + (50 x $2.80) + (50 x $2.50) .............
$410.00
$3,855 [Goods Available] - $410.00 [Ending Inventory] ............
$3,445.00
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
Exercise 5-16B (20 minutes)
At Cost
At Retail
Goods available for sale
Exercise 5-17B (20 minutes)
Goods available for sale
Inventory, January 1 .....................................................
$ 225,000
Net cost of goods purchased* ......................................
802,250
Exercise 5-18 (15 minutes)
1. Samsung generally applies the (weighted) average cost assumption when
assigning costs to its inventories. An exception is for its materials-in-
transit.
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
2. Units in ending inventory
Units available (from part 1) ............................
820 units
3a. FIFO perpetual
Date
Goods Purchased
Cost of Goods Sold
Inventory Balance
Mar. 1
100 @ $50.00 = $5,000
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
[email protected] $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
[email protected] $55.00= $22,000
100 @ $50.00
400 @ $55.00 = $27,000
(avg. = $54.00)
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
Specific identificationAlternative Computation
Cost of goods sold80 units from beginning inventory, 340 units from March 5
4.
Weighted
Specific
Identifi-
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
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
2. Units in ending inventory
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
200 @ $42.00 = $35,400
200 @ $27.00 = $13,800
8/21
100 @ $50.00= $ 5,000
200 @ $42.00
200 @ $27.00 = $18,800
100 @ $50.00
9/5
500 @ $46.00= $23,000
200 @ $42.00
FIFO Alternate Solution Format
Problem 5-3A (Continued)
3b. LIFO perpetual
Date
Goods Purchased
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
200 @ $45.00 = $31,200
400 @ $45.00 = $18,000
8/21
100 @ $50.00= $ 5,000
400 @ $45.00
100 @ $50.00 = $23,000
LIFO alternate solution format
Cost of goods available for sale
$77,200
Less: Cost of sales
500 @ $46
$23,000
100 @ 50
5,000
200 @ 27
5,400

Subscribe Now

Sign up to view full document

View Document