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Chapter 6 - Inventory and Cost of Goods Sold
Problem 6-5B (concluded)
Requirement 3
Ending Inventory
Cost
NRV
Lower of Cost
and NRV
a Ending inventory from Requirement 1 above.
6-82 Financial Accounting, 5e
Problem 6-6B (LO 6-2, 6-3, 6-4, 6-5, 6-6)
Requirement 1
November 2
Debit
Credit
Inventory
9,000
Accounts Payable
9,000
(Purchase inventory on account)
November 3
(Return inventory on account)
November 11
Accounts Payable
7,700
Inventory
231
Cash
7,469
(Pay on account less 3% discount)
($231 = $7,700 × 3%)
November 16
Cash
14,000
Accounts Receivable
14,000
(Receive cash on account)
Chapter 6 - Inventory and Cost of Goods Sold
Problem 6-6B (continued)
Requirement 1 (continued)
November 21
Debit
Credit
Chapter 6 - Inventory and Cost of Goods Sold
Problem 6-6B (concluded)
Requirement 2
November 30
Debit
Credit
Cost of Goods Sold
391
Requirement 3
Yoshi Inc.
Multiple-step Income Statement (partial)
For the month of November
Net sales
$26,600
Chapter 6 - Inventory and Cost of Goods Sold
Problem 6-7B (LO 6-2, 6-7)
Requirement 1
Toys “R” Us
Multiple-step Income Statement
For the month of March, 2021
Net sales:
Total sales revenue
$77,300
Less: Sales discounts
(3,000)
Net sales revenue
$74,300
Problem 6-7B (concluded)
Requirement 2
This ratio will likely be higher in December when inventory is being sold at a much
faster pace due to the holiday season.
Requirement 3
Chapter 6 - Inventory and Cost of Goods Sold
Problem 6-8B (LO 6-7)
Requirement 1
Company 1
Company 2
Requirement 2
Company 1
Company 2
Requirement 3
Company 1 is likely Dillard’s and Company 2 is likely Payless. The reason is that
6-88 Financial Accounting, 5e
Problem 6-9B (LO 6-8)
Requirement 1
June 2
Debit
Credit
Purchases
2,700
Accounts Payable
2,700
(Purchase inventory on account)
June 4
(Return inventory on account)
June 10
Accounts Payable
2,300
Purchase Discounts
23
Cash
2,277
(Pay on account less 1% discount)
($23 = $2,300 × 1%)
June 11
Chapter 6 - Inventory and Cost of Goods Sold
Problem 6-9B (concluded)
Requirement 1 (continued)
June 20
Debit
Credit
Purchases
3,800
Accounts Payable
3,800
(Purchase inventory on account)
June 23
Cash
5,300
Sales Revenue
5,300
(Sell inventory for cash)
Requirement 2
June 30
Debit
Credit
Inventory (ending)
2,078
Problem 6-9B (concluded)
Requirement 3
Circuit Country
Multiple-step Income Statement (partial)
For the month of June
Net sales
$10,300
Cost of goods sold:
Chapter 6 - Inventory and Cost of Goods Sold
Problem 6-10B (LO 6-3, 6-9)
Requirement 1
Date
Transaction
Number
of units
Unit
cost
Ending
Inventory
Oct. 29
Purchase
60
$46
$2,760
Date
Transaction
Number
of units
Unit
cost
Cost of
Goods Sold
Jan. 1
Beginning inventory
35
$40
$ 1,400
Requirement 2
Date
Transaction
Number
of units
Unit
cost
Ending
Inventory
Oct. 29
Purchase
50
$46
$2,300
Date
Transaction
Number
of units
Unit
cost
Cost of
Goods Sold
Jan. 1
Beginning inventory
35
$40
$ 1,400
Requirements 3 and 4
2021
2022
(a) ending inventory
Overstate
No Effect
Chapter 6 - Inventory and Cost of Goods Sold
6-92 Financial Accounting, 5e
ADDITIONAL PERSPECTIVES
AP6-1
Requirement 1 (a)
Sales Revenue
Date
Number of units
Sale price
Total sales
Jul.
31
40
$500
$20,000
Cost of Goods Sold*
Date
Number of units
Unit cost
Total cost
Jul.
17
50
$150
$ 7,500
a First 200 units purchased are assumed sold. Only 30 of the 100 units purchased on
Ending Inventory
Date
Number of units
Unit cost
Total cost
Chapter 6 - Inventory and Cost of Goods Sold
AP6-1 (continued)
Requirement 1 (b)
Great Adventures, Inc.
Partial Income Statement
For the year ended December 31, 2022
Sales revenue
$100,000
Requirement 2 (a)
Inventory
items
Cost
per unit
NRV
per unit
Lower of
Cost and
NRV
per unit
Quantity
Lower of
Cost and
NRV
MU
watches
$180
$100
$100
70
$7,000
Dec. 31, 2022
Debit
Credit
Requirement 2 (b)
Great Adventures reports its inventory in the balance sheet at the lower of cost and net
realizable value, which equals $7,000, as demonstrated in requirement 2(a).
Chapter 6 - Inventory and Cost of Goods Sold
AP6-1 (concluded)
Requirement 2 (c)
Great Adventures, Inc.
Partial Income Statement
For the year ended December 31, 2022
a Cost of goods sold includes the write-down of inventory of $5,600 calculated in
