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

978-0078025754 Chapter 5 Solution Manual Part 3

March 26, 2020
Problem 5-3A (Continued)
3c. Weighted Average
Date
Goods Purchased
Cost of Goods Sold
Inventory Balance
1/1
2/10
400 @ $42.00= $16,800
Problem 5-3A (Continued)
3d. Specific Identification
Cost of goods available for sale ...................
$77,200
Less: Cost of Goods Sold
4.
FIFO
LIFO
Specific
Identifi-
cation
Weighted
Average
5. Montoure’s manager would likely prefer the FIFO method since this
Problem 5-4A (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
2. Units in ending inventory
Problem 5-4A (Concluded)
3.
Periodic Inventory
Ending
Inventory
Cost of
Goods Sold
a. FIFO
(400 x $46.00).............................................................
$18,400.00
(600x$45.00) + (400x$42.00) + (200x$27.00) +
$58,800.00
4.
FIFO
LIFO
Specific
Identifi-
cation
Weighted
Average
Problem 5-5A (50 minutes)
Per Unit
Total
Total
LCM Applied
to Items
Inventory Items
Units
Cost
Market
Cost
Market
Audio equipment:
Receivers ....................
345
$ 90
$ 98
$ 31,050
$ 33,810
$ 31,050
CD players ..................
260
111
100
28,860
26,000
26,000
2.
Dec 31
Cost of Goods Sold .....................................................
19,723
Problem 5-6A (35 minutes)
Part 1
(a)
Cost of goods sold
2014
2015
2016
Reported .......................................
$ 615,000
$ 957,000
$ 780,000
Adjustments: 12/31/2014 error ......
- 56,000
+ 56,000
Reported .......................................
$ 230,000
$ 285,000
$ 241,000
Adjustments: 12/31/2014 error ......
+ 56,000
- 56,000
12/31/2015 error ......
.
- 20,000
+ 20,000
Corrected .....................................
$ 286,000
$ 209,000
$ 261,000
Corrected .....................................
$1,311,000
$1,345,000
$1,200,000
(d)
Equity
2014
2015
2016
Part 2
Total net income for the combined three-year period ($756,000) is not affected
Part 3
The understatement of inventory by $56,000 results in an overstatement of cost of
Problem 5-7AA (25 minutes)
Part 1
Number and total cost of units available for sale
23,000 units in beginning inventory @ $15 .......................... $ 345,000
Part 2
a. FIFO periodic
Total cost of 150,000 units available for sale ...................
$3,150,000
b. LIFO periodic
Total cost of 150,000 units available for sale ...................
$3,150,000
c. Weighted average periodic
Total cost of 150,000 units available for sale ...................
$3,150,000
Problem 5-8AA (50 minutes)
Part 1
QP CORP.
Income Statements Comparing FIFO, LIFO, and Weighted Average
For Year Ended December 31, 2015
FIFO
LIFO
Weighted
Average
Sales ..............................................................
$200,000
$200,000
$200,000
Cost of goods sold
Inventory, Dec. 31, 2014 .............................
12,600
12,600
12,600
Cost of purchases.......................................
109,400
109,400
109,400
Supporting calculations
FIFO
LIFO
Weighted
Average
Dec. 31, 2014, inventory (700 x $18). ................
$ 12,600
$ 12,600
$ 12,600
Purchases
1,700 x $19 = $32,300
800 x $20 = 16,000
Problem 5-8AA (Concluded)
Part 2
If QP Corp. had been experiencing declining costs in the acquisition of
inventory, we would observe the opposite results in our comparisons.
Part 3
Advantages
LIFO: Given the cost trends in the problem, the advantage of using LIFO is
Disadvantages
LIFO: Given the cost trends in the problem, the disadvantage of using LIFO
Problem 5-9AB (25 minutes)
Part 1
ALASKA COMPANY
Estimated Inventory
December 31
At Cost
At Retail
Goods available for sale
Beginning inventory............................................
$ 469,010
$ 928,950
Cost of goods purchased ...................................
3,376,050
6,381,050
Goods available for sale .....................................
$3,845,060
$7,310,000
Part 2
Estimated physical inventory at cost: $1,686,900 x 52.6% = $887,309
ALASKA COMPANY
Inventory Shortage
December 31
At Cost
At Retail
Problem 5-10AB (25 minutes)
WAYWARD COMPANY
Estimated Inventory at March 31
Goods available for sale
Problem 5-1B (40 minutes)
1. Compute cost of goods available for sale and units available for sale
Beginning inventory ...........................
20 units @ $3,000
$ 60,000
2. Units in ending inventory
Problem 5-1B (Continued)
3a. FIFO perpetual
Date
Goods Purchased
Cost of Goods Sold
Inventory Balance
Apr. 1
20 @ $3,000.00 = $ 60,000.00
Problem 5-1B (Continued)
3b. LIFO perpetual
Date
Goods Purchased
Cost of Goods Sold
Inventory Balance
Apr. 1
20 @ $3,000.00 = $ 60,000.00
Apr. 30
10 @ $4,800.00
5 @ $4,500.00
10 @ $3,000.00
= $100,500.00
5 @ $3,000.00 = $ 15,000.00
Problem 5-1B (Continued)
3c. Weighted Average perpetual
Date
Goods Purchased
Cost of Goods Sold
Inventory Balance
Apr. 1
20 @ $3,000.00 = $ 60,000.00
(avg. = $4,000.00)

Subscribe Now

Sign up to view full document

View Document