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Problem 6-6A (continued)
Requirement 1 (continued)
October 20
Debit
Credit
Inventory
7,000
Accounts Payable
7,000
Problem 6-6A (concluded)
Requirement 2
October 31
Debit
Credit
Cost of Goods Sold
350
Requirement 3
Bowser Co.
Multiple-step Income Statement (partial)
For the month of October
Net sales
$20,800
Chapter 6 - Inventory and Cost of Goods Sold
Problem 6-7A (LO 6-2, 6-7)
Requirement 1
Baskin-Robbins
Multiple-step Income Statement
For the month of July, 2018
Net sales:
Total sales revenue
$69,800
Cost of goods sold
28,700
Gross profit
40,000
Operating expenses:
Salaries
13,700
Operating income
16,000
Non-operating items:
Interest income
3,300
Problem 6-7A (concluded)
Requirement 2
Inventory
turnover
=
Cost of goods sold
=
$28,700
Requirement 3
Gross
profit
=
Gross profit
=
$40,000
Chapter 6 - Inventory and Cost of Goods Sold
Problem 6-8A (LO 6-7)
Requirement 1
Company 1
Company 2
Requirement 2
Company 1
Company 2
Requirement 3
Company 1 is likely St. Jude and Company 2 is likely Wawa. The reason is that
convenience stores are likely to sell their inventory quickly, resulting in a higher
Problem 6-9A (LO 6-8)
Requirement 1
July 3
Debit
Credit
Purchases
2,300
Accounts Payable
2,300
(Purchase inventory on account)
July 4
July 11
Accounts Payable
2,100
Purchase Discounts
21
Cash
2,079
Problem 6-9A (continued)
Requirement 1 (concluded)
July 22
Debit
Credit
Cash
4,200
Sales Revenue
4,200
(Sell inventory for cash)
July 28
Requirement 2
July 31
Debit
Credit
Inventory (ending)
2,889
Cost of Goods Sold
5,500
Purchase Returns
500
6-68 Financial Accounting, 4e
Problem 6-9A (concluded)
Requirement 3
CD City
Multiple-step Income Statement (partial)
For the month of July
Net sales
$10,000
Cost of goods sold:
Beginning inventory
$3,400
Add: Purchases
5,400
Chapter 6 - Inventory and Cost of Goods Sold
Problem 6-10A (LO 6-7. 6-9)
Requirement 1
2015
2016
2017
2018
Gross
profit
=
Gross profit
=
$28,000
$20,000
$46,000
$42,000
Requirement 2
2015
2016
2017
2018
Gross
profit
=
Gross profit
=
$28,000
$31,000a
$35,000a
$42,000
a These amounts represent amounts that would have been reported had the $11,000
inventory error not occurred. The understatement of inventory in 2016 has the effect
Requirement 3
Corrected gross profit from 2015-2018 = $28,000 + $31,000 + $35,000 + $42,000
Chapter 6 - Inventory and Cost of Goods Sold
PROBLEMS: SET B
Problem 6-1B (LO 6-3)
Requirement 1 Specific identification
Date
Transaction
Number
of units
Unit
cost
Ending
Inventory
Jun. 1
Beginning inventory
1
$ 350
$ 350
Jun. 12
Purchase
1
340
340
Date
Transaction
Number
of units
Unit
cost
Cost of
Goods Sold
Jun. 1
Beginning inventory
11a
$350
$ 3,850
Jun. 1
Beginning inventory
3b
350
1,050
Requirement 2 FIFO
Date
Transaction
Number
of units
Unit
cost
Ending
Inventory
Jun. 24
Purchase
5
$330
$1,650
Jun. 29
Purchase
9
320
2,880
Problem 6-1B (concluded)
Requirement 3 LIFO
Date
Transaction
Number
of units
Unit
cost
Ending
Inventory
Date
Transaction
Number
of units
Unit
cost
Cost of
Goods Sold
Jun. 1
Beginning inventory
2
$350
$ 700
Requirement 4 Weighted average
Date
Transaction
Number
of units
Unit
cost
Total
Cost
Jun. 1
Beginning inventory
16
$350
$ 5,600
Jun. 12
Purchase
10
340
3,400
Problem 6-2B (LO 6-3, 6-4, 6-5)
Requirement 1 Specific identification
Date
Transaction
Number
of units
Unit
cost
Ending
Inventory
Aug. 1
Beginning inventory
2
$160
$ 320
Aug. 11
Purchase
2
150
300
Date
Transaction
Number
of units
Unit
cost
Cost of
Goods Sold
Aug. 1
Beginning inventory
5a
$160
$ 800
Aug. 11
Purchase
8b
150
1,200
Requirement 2 FIFO
Date
Transaction
Number
of units
Unit
cost
Ending
Inventory
Aug. 20
Purchase
4
$140
$ 560
Date
Transaction
Number
of units
Unit
cost
Cost of
Goods Sold
Aug. 1
Beginning inventory
8
$160
$1,280
Chapter 6 - Inventory and Cost of Goods Sold
Problem 6-2B (continued)
Requirement 3 LIFO
Date
Transaction
Number
of units
Unit
cost
Ending
Inventory
Aug. 1
Beginning inventory
8
$160
$1,280
Aug. 11
Purchase
7
150
1,050
Requirement 4 Weighted average
Date
Transaction
Number
of units
Unit
cost
Total
Cost
Aug. 1
Beginning inventory
8
$160
$1,280
Aug. 11
Purchase
10
150
1,500
Problem 6-2B (concluded)
Requirement 5
Specific
Identification
FIFO
LIFO
Weighted-
average
Cost
Sales revenue
$5,795
$5,795
$5,795
$5,795.00
Requirement 6
FIFO provides the more meaningful measure of ending inventory. The amount of
Requirement 7
August 31
Debit
Credit
Inventory
340
Problem 6-3B (LO 6-2, 6-5)
Requirement 1
June 2
Debit
Credit
Inventory
2,700
Accounts Payable
2,700
(Purchase inventory on account)
June 10
Accounts Payable
2,300
Inventory
23
Cash
2,277
(Pay on account less 1% discount)
($23 = $2,300 × 1%)
Problem 6-3B (concluded)
Requirement 1 (continued)
June 20
Debit
Credit
Inventory
3,800
Accounts Payable
3,800
(Purchase inventory on account)
June 23
Cash
5,300
June 28
Accounts Payable
3,300
Requirement 2
Circuit Country
Multiple-step Income Statement (partial)
For the month of June
Net sales
$10,300
Chapter 6 - Inventory and Cost of Goods Sold
Problem 6-4B (LO 6-6)
Requirement 1
Inventory items
Quantity
Cost
Per unit
Total
Cost
Hammers
110
$ 8.00
$ 880
Saws
60
11.00
660
Requirement 2
Inventory items
Quantity
Cost
Per unit
NRV
per unit
Lower of
Cost and
NRV
per unit
Total
Hammers
110
$ 8.00
$ 8.50
$ 8.00
$ 880
Saws
60
11.00
10.00
10.00
600
Requirement 3
Because the total of lower of cost and net realizable value ($5,450) is less than total
cost ($5,695), inventory is written down for the difference ($245).
Debit
Credit
Requirement 4
The write-down of inventory from cost to net realizable value reduces total assets and
Problem 6-5B (LO 6-3, 6-6)
Requirement 1 FIFO
Date
Transaction
Number
of units
Unit
cost
Ending
Inventory
Oct. 4
Purchase
9
$550
$4,950
Requirement 2 LIFO
Date
Transaction
Number
of units
Unit
cost
Ending
Inventory
Date
Transaction
Number
of units
Unit
cost
Cost of
Goods Sold
Jan. 1
Beginning inventory
11
$500
$ 5,500
Problem 6-5B (concluded)
Requirement 3
Ending Inventory
Cost
NRV
Lower of Cost
and NRV
a Ending inventory from Requirement 1 above.
FIFO
Debit
Credit
