CHAPTER 7 Inventories
Ex. 7–22
$666,900 ($1,235,000 × 54%)
Ex. 7–23
Ex. 7–24
Ex. 7–25
Cost Retail
Merchandise inventory, June 1 $ 165,000 $ 275,000
Purchases in June (net) 2,361,500 3,800,000
Ex. 7–26
a. Merchandise inventory, January 1 $ 350,000
Purchases (net), January 1–December 31 2,950,000
Merchandise available for sale $3,300,000
b. The gross profit method is useful for estimating inventories for monthly or
CHAPTER 7 Inventories
Ex. 7–27
Merchandise available for sale………………………………………………
…
$6,125,000
Ex. 7–28
…
$960,000
CHAPTER 7 Inventories
Prob. 7–1A
1.
Unit Total Unit Total Unit Total
Quantity Cost Cost Quantity Cost Cost Quantity Cost Cost
Jan. 12,500 60.00 150,000
10 7,500 68.00 510,000 2,500 60.00 150,000
7,500 68.00 510,000
28 2,500 60.00 150,000
16 4,500 68.00 306,000
4,500 70.00 315,000 13,500 70.00 945,000
28 8,500 70.00 595,000 5,000 70.00 350,000
Mar. 515,000 71.60 1,074,000 5,000 70.00 350,000
PROBLEMS
2016
Date
Purchases Cost of Merchandise Sold Inventory
CHAPTER 7 Inventories
Prob. 7–1A (Concluded)
2. Accounts Receivable 5,191,250
Sales 5,191,250
3. $2,286,750 ($5,191,250 – $2,904,500)
5.
Because the prices rose from $60 for the January 1 inventory to $72 for the purchase
*
CHAPTER 7 Inventories
Prob. 7–2A
1.
Unit Total Unit Total Unit Total
Quantity Cost Cost Quantity Cost Cost Quantity Cost Cost
Jan. 12,500 60.00 150,000
10 7,500 68.00 510,000 2,500 60.00 150,000
7,500 68.00 510,000
28 3,750 68.00 255,000 2,500 60.00 150,000
16 9,000 70.00 630,000 2,500 60.00 150,000
2,000 68.00 136,000
9,000 70.00 630,000
28 8,500 70.00 595,000 2,500 60.00 150,000
2,000 68.00 136,000
500 70.00 35,000
500 70.00 35,000
500 70.00 35,000
500 70.00 35,000
5,000 71.60 358,000
500 70.00 35,000
Cost of Merchandise Sold Inventory
2016
Date
Purchases
CHAPTER 7 Inventories
Prob. 7–2A (Concluded)
2.
Total sales…………………………………………………………………………
$5,191,250
2,939,000
*
CHAPTER 7 Inventories
Prob. 7–3A
1.
Unit Total Total Total
Quantity Cost Cost Quantity Unit Cost Cost Quantity Unit Cost Cost
Jan. 1 2,500 60.00 150,000
10 7,500 68.00 510,000 10,000 66.00 660,000
16 9,000 69.20 622,800 13,500 69.20 934,200
28 8,500 69.20 588,200 5,000 69.20 346,000
2. Total sales……………………………………………………………
…
$5,191,250
Total cost of merchandise sold…………………………………… 2,907,000
Cost of Merchandise Sold Inventory
Date
Purchases
*
CHAPTER 7 Inventories
Prob. 7–4A
1. First-In, First-Out Method
Merchandise inventory, March 31, 2016…………………………………
$269,500
Cost of merchandise sold…………………………………………………
2,904,500
Supporting computations
2. Last-In, First-Out Method
Merchandise inventory, March 31, 2016…………………………………
$235,000
Cost of merchandise sold…………………………………………………
2,939,000
Supporting computations
units @ $60.00………………………………………………………
CHAPTER 7 Inventories
Prob. 7–4A (Continued)
3. Weighted Average Cost Method
Merchandise inventory, March 31, 2016………………………
$261,600
Cost of merchandise sold………………………………………
2,912,400
45,500 units
Merchandise inventory:
Cost of merchandise sold:
Beginning inventory, January 1, 2016…………………………
$150,000
CHAPTER 7 Inventories
Prob. 7–4A (Concluded)
4. Weighted
FIFO LIFO Average
Sales $5,191,250 $5,191,250 $5,191,250
CHAPTER 7 Inventories
Prob. 7–5A
1. First-In, First-Out Method
Model Quantity Unit Cost Total Cost
A10 4 $ 76 $304
270 140
B15 6184 1,104
2170 340
2. Last-In, First-Out Method
Model Quantity Unit Cost Total Cost
A10 4 $ 64 $256
270 140
B15 8176 1,408
E60 375 225
265 130
CHAPTER 7 Inventories
Prob. 7–5A (Concluded)
3. Weighted Average Cost Method
Quantity Unit Cost*Total Cost
6 $ 70 $420
8174 1,392
*Computations of unit costs:
A10: $70 = [(4 × $64) + (4 × $70) + (4 × $76)] ÷ (4 + 4 + 4)
B15: $174 = [(8 × $176) + (4 × $158) + (3 × $170) + (6 × $184)] ÷ (8 + 4 + 3 + 6)
4. a. During periods of rising prices, the LIFO method will result in a lower cost
of inventory, a greater amount of cost of merchandise sold, and a lesser
Model
A10
B15
CHAPTER 7 Inventories
Prob. 7–6A
Market
Value per
Cost Unit (Net
per Realizable
Description Unit Value) Cost Market LCM
B12 38 30 $ 60 $ 57 $ 1,800 $ 1,710
4,237 4,158 4,158
L88 18 10 563 550 5,630 5,500
8 560 550 4,480 4,400
10,110 9,900 9,900
N94 400 8 7 3,200 2,800 2,800
P24 90 80 22 18 1,760 1,440
10 21 18 210 180
Quantity
Inventory Sheet
December 31, 2016
Inventory
Total
CHAPTER 7 Inventories
Prob. 7–7A
1.
Cost Retail
Merchandise inventory, August 1 $ 300,000 $ 575,000
Net purchases 2,149,000 3,375,000
2.
Cost
a. Merchandise inventory, March 1 $ 880,000
Net purchases 9,500,000
Merchandise available for sale $10,380,000
Sales $15,800,000
CELEBRITY TAN CO.
RANCHWORKS CO.
1.
Unit Total Unit Total Unit Total
Quantity Cost Cost Quantity Cost Cost Quantity Cost Cost
Apr. 325 1,200 30,000
875 1,240 93,000 25 1,200 30,000
75 1,240 93,000
11 25 1,200 30,000
15 1,240 18,600 60 1,240 74,400
30 30 1,240 37,200 30 1,240 37,200
May 860 1,260 75,600 30 1,240 37,200
60 1,260 75,600
Cost of Merchandise Sold Inventory
2016
Date
Purchases
CHAPTER 7 Inventories
Prob. 7–1B (Concluded)
2. Accounts Receivable 525,250
Sales 525,250
4. $32,864 (26 units × $1,264)
5.
Because the prices rose from $1,200 for the April 3 inventory to $1,264 for the purchas
*
CHAPTER 7 Inventories
Prob. 7–2B
1.
Unit Total Unit Total Unit Total
Quantity Cost Cost Quantity Cost Cost Quantity Cost Cost
Apr. 3 25 1,200 30,000
8 75 1,240 93,000 25 1,200 30,000
10 1,260 12,600
19 10 1,260 12,600
5 1,240 6,200
5 1,200 6,000 20 1,200 24,000
28 80 1,260 100,800 20 1,200 24,000
Cost of Merchandise Sold Inventory
2016
Date
Purchases