Problem 6-6A (continued)
Requirement 1 (continued)
October 20
Debit
Credit
Inventory
7,000
Accounts Payable
7,000
October 22
Cash
Cost of Goods Sold
6,840
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
Cost of goods sold*
Gross profit
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
Utilities
Rent
Operating income
16,000
Non-operating items:
Interest income
3,300
Interest expense
Income tax expense
6,000
Net income
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
Cash
(Pay freight-in)
July 9
Purchase Returns
(Return inventory on account)
July 11
Accounts Payable
2,100
Purchase Discounts
21
Cash
2,079
($21 = $2,100 × 1%)
July 12
Accounts Receivable
5,800
(Sell inventory on account)
July 15
Cash
Accounts Receivable
July 18
Purchases
3,100
Accounts Payable
(Purchase inventory on account)
Problem 6-9A (continued)
Requirement 1 (concluded)
July 22
Debit
Credit
Cash
4,200
Sales Revenue
4,200
(Sell inventory for cash)
July 28
Accounts Payable
July 30
Accounts Payable
2,800
(Pay cash on account)
Requirement 2
July 31
Debit
Credit
Inventory (ending)
2,889
Cost of Goods Sold
5,500
Purchase Returns
500
Purchase Discounts
(Record period-end adjustment)
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
Less: Ending inventory
Cost of goods sold
Gross profit
$4,500
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
Jun. 24
Purchase
3
330
990
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
Jun. 12
Purchase
340
Jun. 1
Beginning inventory
350
350
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
Date
Transaction
of units
cost
Goods Sold
Jun. 1
Beginning inventory
$350
Jun. 12
Purchase
340
3,400
Jun. 24
Purchase
330
1,650
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
Jun. 12
Purchase
10
340
Jun. 24
Purchase
10
330
Jun. 29
Purchase
9
320
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
Jun. 24
Purchase
10
3,300
Jun. 29
Purchase
9
320
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
Aug. 29
Purchase
130
$2,050
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
Aug. 1
Beginning inventory
1c
160
160
Aug. 20
Purchase
140
1,400
Requirement 2 FIFO
Date
Transaction
Number
of units
Unit
cost
Ending
Inventory
Aug. 20
Purchase
4
$140
$ 560
Aug. 29
Purchase
130
$1,990
Date
Transaction
Number
of units
Unit
cost
Cost of
Goods Sold
Aug. 1
Beginning inventory
8
$160
$1,280
Aug. 20
Purchase
6
140
840
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
Date
Transaction
of units
cost
Aug. 11
Purchase
3
$150
Aug. 20
Purchase
10
140
1,400
Aug. 29
Purchase
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
Aug. 20
Purchase
10
1,400
Aug. 29
Purchase
130
39
Problem 6-2B (concluded)
Requirement 5
Specific
Identification
FIFO
LIFO
Weighted-
average
Cost
Sales revenue
$5,795
$5,795
$5,795
$5,795.00
Cost of goods sold
Gross profit
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 4
Inventory
Cash
(Pay freight-in)
June 8
Inventory
(Return inventory on account)
June 10
Accounts Payable
2,300
Inventory
23
Cash
2,277
(Pay on account less 1% discount)
($23 = $2,300 × 1%)
June 11
Accounts Receivable
5,000
(Sell inventory on account)
Cost of Goods Sold
Inventory
(Record cost of inventory sold)
June 18
Cash
Accounts Receivable
(Receive cash on account)
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
Cost of Goods Sold
3,600
(Record cost of inventory sold)
June 26
(Return inventory on account)
June 28
Accounts Payable
3,300
Inventory
(Pay cash on account)
($99 = $3,300 × 3%)
Requirement 2
Circuit Country
Multiple-step Income Statement (partial)
For the month of June
Net sales
$10,300
Cost of goods sold
Gross profit
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
Screwdrivers
Drills
50
26.00
1-gallon paint cans
170
6.50
Paint brushes
190
7.00
$5,695
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
Screwdrivers
140
3.00
420
Drills
1-gallon paint cans
170
6.50
Paint brushes
190
7.00
$5,450
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
Date
Transaction
Number
of units
Unit
cost
Cost of
Goods Sold
Jan. 1
Beginning inventory
$500
Apr. 9
Purchase
15,600
Requirement 2 LIFO
Date
Transaction
Number
of units
Unit
cost
Ending
Inventory
Jan. 1
Beginning inventory
9
$500
Date
Transaction
Number
of units
Unit
cost
Cost of
Goods Sold
Jan. 1
Beginning inventory
11
$500
$ 5,500
Apr. 9
Purchase
15,600
Oct. 4
Purchase
Problem 6-5B (concluded)
Requirement 3
Ending Inventory
Cost
NRV
Lower of Cost
and NRV
FIFO
a Ending inventory from Requirement 1 above.
FIFO
Debit
Credit