407
Problem 6-10AB (25 minutes)
WAYWARD COMPANY
Estimated Inventory at March 31
Goods available for sale
Inventory, January 1 ……………………………………….
$ 302,580
Cost of goods purchased ………………………………..
Goods available for sale ………………………………….
Less estimated cost of goods sold
Sales ………………………………………………………………
Net sales ……………………………………………………….
[$1,202,750 x (1 – 34%)] ………………………………
Estimated March 31 inventory …………………………..
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 6
PROBLEM SET B
Problem 6-1B (40 minutes)
1. Compute cost of goods available for sale and units available for sale
Beginning inventory …………………..
20 units @ $3,000
$ 60,000
April 6 ……………………………………….
30 units @ $3,500
April 17 ………………………………………
April 25 ………………………………………
10 units @ $4,800
Units available …………………………...
2. Units in ending inventory
Units available (from part 1) ……………………….
65 units
60 units
Apr. 17
5 @ $4,500.00
Problem 6-1B (Continued)
3a. FIFO perpetual
Date
Goods Purchased
Cost of Goods Sold
Inventory Balance
Apr. 1
20 @ $3,000.00 = $ 60,000.00
Apr. 6
30 @ $3,500.00
20 @ $3,000.00
Apr. 17
5 @ $4,500.00
Problem 6-1B (Continued)
3b. LIFO perpetual
Date
Goods Purchased
Cost of Goods Sold
Inventory Balance
Apr. 1
20 @ $3,000.00 = $ 60,000.00
Apr. 6
30 @ $3,500.00
20 @ $3,000.00
Apr. 9
15 @ $3,300.00 = $ 49,500.00
Apr. 17
5 @ $4,500.00
Problem 6-1B (Continued)
3c. Weighted Average perpetual
Date
Goods Purchased
Cost of Goods Sold
Inventory Balance
Apr. 1
20 @ $3,000.00 = $ 60,000.00
Apr. 6
30 @ $3,500.00
20 @ $3,000.00
412
Problem 6-1B (Concluded)
3d. Specific Identification
Cost of goods sold— 20 [8 + 12] units from beginning inventory
4.
FIFO
LIFO
Weighted
Average
Specific
Identification
Sales* ………………………………..
$770,000
$770,000
$770,000
$770,000
Problem 6-2B (40 minutes)
1. Compute cost of goods available for sale and units available for sale
Beginning inventory …………………..
20 units @ $3,000
$ 60,000
April 6 ……………………………………….
30 units @ $3,500
April 17 ………………………………………
April 25 ………………………………………
10 units @ $4,800
Units available …………………………...
2. Units in ending inventory
Units available (from part 1) ……………………….
65 units
60 units
3.
Periodic Inventory
Ending
Inventory
Cost of
Goods Sold
a. FIFO
414
Problem 6-2B (Concluded)
4.
FIFO
LIFO
Weighted
Average
Specific
Identifi-
cation
Sales* ………………………………..
$770,000
$770,000
$770,000.00
$770,000
415
Problem 6-3B (40 minutes)
1. Compute cost of goods available for sale and units available for sale
Beginning inventory …………………..
150 units @ $300
$ 45,000
350 units @ $350
100 units @ $458
Units available …………………………...
2. Units in ending inventory
Units available (from part 1) ……………………….
680 units
480 units
3a. FIFO perpetual
Date
Goods Purchased
Cost of Goods Sold
Inventory Balance
May 1
150 @ $300 = $ 45,000
May 9
150 @ $300
170 @ $350
Problem 6-3B (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
417
Problem 6-3B (Continued)
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
May 17
320 @ $335
150 @ $300
3d. Specific Identification
Cost of goods sold— 80 units from beginning inventory
Problem 6-3B (Continued)
4.
FIFO
LIFO
Weighted
Average
Specific
Identifi-
cation
Sales* ………………………………..
$636,000
$636,000
$636,000
$636,000
5. The manager of Aloha Company likely will prefer the FIFO method
Problem 6-4B (40 minutes)
1. Compute cost of goods available for sale and units available for sale
Beginning inventory …………………..
150 units @ $300
$ 45,000
350 units @ $350
Units available …………………………...
2. Units in ending inventory
Units available (from part 1) ……………………….
680 units
Problem 6-4B (Concluded)
3.
Periodic Inventory
Ending
Inventory
Cost of
Goods Sold
a. FIFO
4.
FIFO
LIFO
Weighted
Average
Specific
Identifi-
cation
Sales* ………………………………..
$636,000
$636,000
$636,000
$636,000
5. The manager likely will prefer the FIFO method because it would yield
Problem 6-5B (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
Chairs ………………..
395
227
256
89,665
Mats …………………..
687
33,663
Two–drawer ……….
114
9,234
Four–drawer ………
298
135
122
40,230
Lateral ……………….
104
118
Projectors ………….
370
168
200
62,160
Copiers ……………..
475
317
288
2.
Dec 31
Cost of Goods Sold ……………………………………………..
30,072
421
Problem 6-6B (35 minutes)
Part 1
(a)
Cost of goods sold
2016
2017
2018
Reported ……………………………..
$ 207,200
$ 213,800
$ 197,030
Adjustments: 12/31/2016 error
+ 26,000
Corrected …………………………….
$ 169,800
$ 223,030
(b)
Net income
2016
2017
2018
Reported ……………………………..
$ 175,800
$ 212,270
$ 184,910
Adjustments: 12/31/2016 error
+ 26,000
Corrected …………………………….
$ 157,800
$ 158,910
(c)
Total current assets
2016
2017
2018
Reported ……………………………..
$ 276,000
$ 277,500
$ 272,950
Adjustments: 12/31/2016 error
+ 26,000
Corrected …………………………….
$ 258,000
$ 303,500
(d)
Equity
2016
2017
2018
Reported …………………………………….
$ 314,000
$ 315,000
$ 346,000
Adjustments: 12/31/2016 error
+ 26,000
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
422
Problem 6-7BA (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 ………………………………………….
11,000 units purchased @ $29 ………………………………………….
7,600 units purchased @ $27 ………………………………………….
Part 2
a. FIFO periodic
Total cost of 50,000 units available for sale…….
$1,560,000
Less ending inventory on a FIFO basis
$205,200
b. LIFO periodic
Total cost of 50,000 units available for sale…….
$1,560,000
Less ending inventory on a LIFO basis
$227,500
c. Weighted average periodic
Total cost of 50,000 units available for sale…….
$1,560,000
423
Problem 6-8BA (30 minutes)
Part 1
SHEPARD COMPANY
Income Statements Comparing FIFO, LIFO, and Weighted Average
For Year Ended December 31, 2017
FIFO
LIFO
Weighted
Average
Sales ……………………………………………………..
$400,000
$400,000
$400,000
Cost of goods sold
Supporting calculations
FIFO
LIFO
Weighted
Average
Dec. 31, 2016, inventory (840 x $58) ………………
Purchases
600 x $59 = $ 35,400
700 x $64 = 44,800
Dec. 31, 2017, inventory
$ 62,000