Exercise 6-4 (continued)
Requirement 2 LIFO
(a)
Date
Transaction
Number
of units
Unit
cost
Ending
Inventory
Jan. 1
Beginning Inventory
50
$42
$2,100
(b)
Date
Transaction
Number
of units
Unit
cost
Cost of
Goods Sold
Apr. 7
Purchase
130
$44
$ 5,720
Jul. 16
Purchase
200
47
9,400
Oct. 6
Purchase
110
5,280
Exercise 6-4 (concluded)
Requirement 3 Weighted average
Transaction
Number
of units
Unit
cost
Total
cost
Beginning Inventory
50
$42
$ 2,100
Purchase
130
44
5,720
Purchase
200
47
9,400
Purchase
110
48
5,280
490
$22,500
Weighted-average cost = $22,500 / 490 units = $45.91837
Requirement 4
FIFO
LIFO
Weighted-
average
Chapter 6 – Inventory and Cost of Goods Sold
Exercise 6-5 (LO 6-3)
Requirement 1 FIFO
(a)
Date
Transaction
Number
of units
Unit
cost
Ending
Inventory
Nov. 11
Purchase
(b)
Date
Transaction
Number
of units
Unit
cost
Cost of
Goods Sold
Jan. 1
Beginning inventory
20
$22
$ 440
Mar. 4
Purchase
25
21
525
Nov. 11
Purchase
108
Exercise 6-5 (continued)
Requirement 2 LIFO
(a)
Date
Transaction
Number
of units
Unit
cost
Ending
Inventory
Jan. 1
Beginning Inventory
20
$22
$440
Mar. 4
Purchase
(b)
Date
Transaction
Number
of units
Unit
cost
Cost of
Goods Sold
Mar. 4
Purchase
21
$21
$ 441
Jun. 9
Purchase
Nov. 11
Purchase
Exercise 6-5 (concluded)
Requirement 3 Weighted average
Date
Transaction
Number
of units
Unit
cost
Total
Cost
Jan. 1
Beginning Inventory
20
$22
$ 440
Mar. 4
Purchase
25
21
525
Jun. 9
Purchase
30
Nov. 11
Purchase
30
540
$2,105
Requirement 4
FIFO
LIFO
Weighted-
average
Exercise 6-6 (LO 6-5)
Debit
Credit
Inventory
310,000
Accounts Payable
310,000
(Purchase inventory on account)
Accounts Receivable
Sales Revenue
520,000
Cost of Goods Sold
Inventory
335,000
(Cost of inventory sold)
Chapter 6 – Inventory and Cost of Goods Sold
Exercise 6-7 (LO 6-5)
June 5
Debit
Credit
Inventory
4,000
Accounts Payable
4,000
(Purchase inventory on account)
June 9
Debit
Credit
Accounts Payable
800
Inventory
($800 = 40 units × $20 unit cost)
June 16
Debit
Credit
Accounts Receivable
Sales Revenue
($5,600 = 160 units × $35 unit price)
Cost of Goods Sold
3,200
($3,200 = 160 units × $20 unit cost)
Exercise 6-8 (LO 6-5)
Requirement 1
June 5
Debit
Credit
Inventory
3,800
Accounts Payable
3,800
(Purchase inventory on account)
June 12
Accounts Payable
3,800
Inventory
Cash
($76 = $3,800 × 2%)
Requirement 2
June 22
Debit
Credit
Accounts Payable
3,800
Cash
3,800
(Pay on account)
Exercise 6-9 (LO 6-5)
Requirement 1
May 2
Debit
Credit
Inventory
3,300
Accounts Payable
3,300
(Purchase inventory on account)
May 3
Inventory
Cash
May 5
Accounts Payable
Inventory
(Return inventory on account)
May 10
Accounts Payable
2,900
Inventory
29
Cash
2,871
(Pay on account with 1% discount)
($29 = $2,900 × 1%)
May 30
Sales Revenue
4,000
(Sell inventory on account)
Cost of Goods Sold
Inventory
(Record cost of inventory sold)
Requirement 2
May 24
Debit
Credit
Accounts Payable
2,900
Cash
2,900
(Pay cash on account)
Exercise 6-10 (LO 6-5)
July 5
Debit
Credit
Inventory
100,000
Accounts Payable
100,000
(Purchase inventory on account)
July 8
Accounts Payable
Inventory
(Return inventory on account)
July 13
Accounts Payable
Inventory
Cash
July 28
Accounts Receivable
114,000
Sales Revenue
114,000
(Sell inventory on account)
Inventory
(Record cost of inventory sold)
Chapter 6 – Inventory and Cost of Goods Sold
Exercise 6-11 (LO 6-5)
August 6
Debit
Credit
Inventory
14,000
Accounts Payable
14,000
(Purchase inventory on account)
August 7
Inventory
Cash
(Pay freight-in cost)
August 10
Accounts Payable
1,200
Inventory
1,200
(Return inventory on account)
August 14
Accounts Payable
Inventory
Cash
August 23
Accounts Receivable
11,000
Sales Revenue
11,000
(Sell inventory on account)
Cost of Goods Sold
Inventory
(Record cost of inventory sold)
Exercise 6-12 (LO 6-5)
August 6
Accounts Receivable
14,000
Sales Revenue
14,000
(Sell inventory on account)
Cost of Goods Sold
12,600
(Record cost of inventory sold)
August 10
Sales Returns
1,200
Accounts Receivable
1,200
(Receive return on account)
August 14
Cash
12,672
Sales Discounts
Accounts Receivable
12,800
Exercise 6-13 (LO 6-6)
Requirement 1
Inventory
Quantity
Lower of Cost
and NRV
Ending
Inventory
Furniture
Electronics
Requirement 2
Debit
Credit
Cost of Goods Sold
5,000
Requirement 3
The write-down of inventory has the effect of reducing total assets (inventory),
Exercise 6-14 (LO 6-6)
Requirement 1
Inventory
Quantity
Lower of Cost
and NRV
Ending
Inventory
Shirts
35
$ 60
$ 2,100
MegaDriver
MegaDriver II
30
Requirement 2
Debit
Credit
Cost of Goods Sold
1,650
Requirement 3
The write-down of inventory has the effect of reducing total assets (inventory),
Chapter 6 – Inventory and Cost of Goods Sold
Exercise 6-15 (LO 6-2, 6-7)
Requirement 1
Lewis
Clark
Beginning inventory
$ 24,000
$ 50,000
Add: Purchases
261,000
235,000
Less: Purchase returns
(15,000)
(60,000)
Less: Ending inventory
(60,000)
Requirement 2
Lewis
Clark
Inventory
turnover
=
Cost of goods sold
$252,000
$165,000
Requirement 3
Lewis
Clark
Average
365
365
365
Requirement 4
Lewis seems to be managing its inventory more efficiently. For Lewis, inventory turns
Exercise 6-16 (LO 6-2, 6-7)
Requirement 1
Gross
Profita
Operating
Incomeb
Income Before
Income Taxesc
Net
Incomed
Henry
$27,200
$22,200
$20,200
$18,200
Grace
James
Requirement 2
Henry
Grace
James
Gross
profit
=
Gross profit
$27,200
$10,500
$15,200
Chapter 6 – Inventory and Cost of Goods Sold
Exercise 6-17 (LO 6-8)
Requirement 1
May 2
Debit
Credit
Purchases
3,300
Accounts Payable
3,300
(Purchase inventory on account)
May 3
200
Cash
(Pay freight-in cost)
May 5
Accounts Payable
Purchase Returns
(Return inventory on account)
May 10
Accounts Payable
2,900
Purchase Discounts
29
Cash
2,871
May 30
Accounts Receivable
4,000
Sales Revenue
4,000
(Sell inventory on account)
(Pay cash on account with 1% discount)
Requirement 2
May 31
Debit
Credit
Cost of Goods Sold
3,071
Purchase Returns
400
Purchase Discounts
29
Purchases
3,300
Exercise 6-18 (LO 6-8)
Requirement 1
July 5
Debit
Credit
Purchases
100,000
Accounts Payable
100,000
(Purchase inventory on account)
July 8
Accounts Payable
5,000
Purchase Returns
(Return inventory on account)
July 13
Accounts Payable
Purchase Discounts
Cash
July 28
Accounts Receivable
Sales Revenue
114,000
(Sell inventory on account)
Requirement 2
July 31
Debit
Credit
Cost of Goods Sold
92,150
Purchase Returns
5,000
Purchase Discounts
Purchases
100,000
Exercise 6-19 (LO 6-9)
August 6
Debit
Credit
Purchases
14,000
Accounts Payable
14,000
(Purchase inventory on account)
August 7
Cash
August 10
Accounts Payable
Purchase Returns
(Return inventory on account)
August 14
Accounts Payable
12,800
Purchase Discounts
128
Cash
12,672
August 23
Accounts Receivable
11,000
Sales Revenue
11,000
(Sell inventory on account)
Requirement 2
August 31
Debit
Credit
Inventory (ending)
2,859.50
Cost of Goods Sold
10,212.50
Purchase Returns
Purchase Discounts
Purchases
14,000