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Weygandt Accounting Principles, 12e
Chapter Five
Solutions to Challenge Exercises
Challenge Exercise 5-1 – Solution
a) (1) April 5 Inventory ........................................................... 20,000
Accounts Payable .................................... 20,000
(2) April 6 Inventory ........................................................... 500
Cash ........................................................ 500
b) The cost of the goods acquired is $17,160 ($20,000 + $500 - $3,000 - $340). The cost of goods sold would
be $10,296 (60% X $17,160).
c) If the $500 was paid on April 6 to ship goods to a customer, the account debited in the entry would be
Freight-Out or Delivery Expense instead of Inventory. When freight is paid to ship goods to a customer, it is
Challenge Exercise 5-2 – Solution
(a) Cost of Goods Sold ($17,500 – $16,450) ...................................... 1,050
Inventory ............................................................................. 1,050
(b) Sales Revenue ............................................................................. 126,000
Income Summary ................................................................ 126,000
(c) Inventory ($17,500 – $17,800) ...................................................... 300
Cost of Goods Sold ................................................................ 300
