Type
Solution Manual
Book Title
N/A
ISBN 13
N/A

978-0078025754 Chapter 5 Solution Manual Part 4

March 26, 2020
Problem 5-1B (Concluded)
3d. Specific Identification
Date
Goods Purchased
Cost of Goods Sold
Inventory Balance
Apr. 1
Apr. 6
30 @ $3,500.00
= $105,000.00
Apr. 9
8 @ $3,000.00
27 @ $3,500.00
= $118,500.00
Specific identificationAlternative Computation
Cost of goods sold20 [8+12] units from beginning inventory, 30 [27+3] units from
April 6 purchase, and 10 units from April 25 purchase
Ending Cost of
Specific Identification Inventory Goods Sold
(20 x $3,000) + (30 x $3,500) + (10 x $4,800) ............ $213,000
$235,500 [Total Goods Available] - $213,000 [Cost of Goods Sold] .. $22,500
4.
FIFO
LIFO
Weighted
Average
Specific
Identification
Problem 5-2B (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
3.
Periodic Inventory
Ending
Inventory
Cost of
Goods Sold
a. FIFO
(5 x $4,800)................................................................
$24,000.00
Problem 5-2B (Concluded)
4.
FIFO
LIFO
Weighted
Average
Specific
Identifi-
cation
Problem 5-3B (40 minutes)
1. Compute cost of goods available for sale and units available for sale
Beginning inventory ...........................
150 units @ $300
$ 45,000
2. Units in ending inventory
Units available (from part 1) ............................
680 units
Less: Units sold (180 + 300) ............................
480 units
Ending Inventory (units) ................................
200 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
Problem 5-3B (Continued)
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)
Problem 5-3B (Continued)
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
May 9
80 @ $300 = $ 24,000
100 @ $350 = $ 35,000
70 @ $300
250 @ $350 = $108,500
Specific identificationAlternative Computation
Cost of goods sold80 units from beginning inventory, 300 [100+200] units from May
6 purchase, and 100 units from May 25 purchase
Ending Cost of
Specific Identification Inventory Goods Sold
Problem 5-3B (Continued)
4.
FIFO
LIFO
Weighted
Average
Specific
Identifi-
cation
5. The manager of Aloha Company likely will prefer the FIFO method
Problem 5-4B (40 minutes)
1. Compute cost of goods available for sale and units available for sale
Beginning inventory ...........................
150 units @ $300
$ 45,000
2. Units in ending inventory
Problem 5-4B (Concluded)
3.
Periodic Inventory
Ending
Inventory
Cost of
Goods Sold
a. FIFO
(100 x $458.00) + (80 x $450.00) + (20 x $350.00) ..
$88,800.00
(150 x $300.00) + (330 x $350.00) ............................
$160,500.00
4.
FIFO
LIFO
Weighted
Average
Specific
Identifi-
cation
Sales* ......................................
$636,000
$636,000
$636,000
$636,000
*Sales = (180 units x $1,200) + (300 units x $1,400) = $636,000
5. The manager likely will prefer the FIFO method because it would yield
Problem 5-5B (50 minutes)
Per Unit
Total
Total
LCM Applied
Inventory Items
Units
Cost
Market
Cost
Market
to Items
Office furniture
Desks ....................
536
$261
$305
$139,896
$163,480
$139,896
Credenzas ............
395
227
256
89,665
101,120
89,665
Chairs ....................
687
49
43
33,663
29,541
29,541
2.
Dec 31
Cost of Goods Sold .....................................................
30,072
Problem 5-6B (35 minutes)
Part 1
(a)
Cost of goods sold
2014
2015
2016
Reported ...................................
$ 207,200
$ 213,800
$ 197,030
(b)
Net income
2014
2015
2016
Reported ...................................
$ 175,800
$ 212,270
$ 184,910
Corrected ..................................
$ 258,000
$ 303,500
$ 272,950
(d)
Equity
2014
2015
2016
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 goods
Problem 5-7BA (25 minutes)
Part 1
Number and total cost of units available for sale
6,500 units in beginning inventory @ $35 .............................
$ 227,500
11,500 units purchased @ $33 .................................................
379,500
Part 2
a. FIFO periodic
Total cost of 50,000 units available for sale.......
$1,560,000
b. LIFO periodic
Total cost of 50,000 units available for sale.......
$1,560,000
c. Weighted average periodic
Total cost of 50,000 units available for sale.......
$1,560,000
Problem 5-8BA (30 minutes)
Part 1
SHEPARD COMPANY
Income Statements Comparing FIFO, LIFO, and Weighted Average
For Year Ended December 31, 2015
FIFO
LIFO
Weighted
Average
Sales ..............................................................
$400,000
$400,000
$400,000
Cost of goods sold
Inventory, Dec. 31, 2014 .............................
48,720
48,720
48,720
Cost of purchases.......................................
261,280
261,280
261,280
Cost of goods available for sale ................
310,000
310,000
310,000
Supporting calculations
FIFO
LIFO
Weighted
Average
Dec. 31, 2014, inventory (840 x $58) ..................
$ 48,720
$ 48,720
$ 48,720
Purchases
600 x $59 = $ 35,400
1,205 x $61 = 73,505
Problem 5-8BA (Concluded)
Part 2
If Shepard Company had been experiencing decreasing costs in the
Part 3
Advantages
LIFO: Assuming a trend of increasing costs, the advantage of using LIFO is
Disadvantages
LIFO: Assuming a trend of increasing costs, the disadvantage of using
Problem 5-9BB (25 minutes)
Part 1
MACKLIN COMPANY
Estimated Inventory
December 31
At Cost At Retail
Goods available for sale
Beginning inventory .............................................
$ 90,022
$115,610
Cost of goods purchased .....................................
502,250
761,830
Goods available for sale .......................................
$592,272
$877,440
Part 2
MACKLIN COMPANY
Inventory Shortage
December 31
At Cost At Retail

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