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