# Accounting Chapter 6 Homework The net realizable value of ending inventory

Page Count
14 pages
Word Count
1730 words
Book Title
Financial Accounting Connect Access Code 4th Edition
Authors
David Spiceland, Don Herrmann, Wayne Thomas
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
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
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
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
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

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