Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Chapter 3, Problem 1E
Exercise 3-1 Determining the cost of financing inventory
On January 1, 2018, Jana started a small flower merchandising business that she named Jana’s Flowers. The company experienced the following events during the first year of operation:
1. Started the business by issuing common stock for $30,000 cash.
2. Paid $19,000 cash to purchase inventory.
3. Sold merchandise that cost $10,000 for $21,000 on account.
4. Collected $16,000 cash from
5. Paid $3,750 for operating expenses.
Required
a. Organize ledger accounts under an
b. Prepare an income statement, a
c. Since Jana sold inventory for $21,000, she will be able to recover more than half of the $30,000 she invested in the stock. Do you agree with this statement? Why or why not?
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Start by entering the beginning inventory balances. Enter the transactions in chronological order, calculating new inventory on hand balances after each transaction. Once all of the transactions…
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Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases. Also, on December 15, Monson sells 27 units for $20 each.
Purchases on December 7
17 units @ $8.00 cost
Purchases on December 14
34 units @ $12.00 cost
Purchases on December 21
27 units @ $14.00 cost
Required:Monson sells 27 units for $20 each on December 15. Of the units sold, 14 are from the December 7 purchase and 13 are from the December 14 purchase. Monson uses a perpetual inventory system. Determine the costs assigned to the December 31 ending inventory when costs are assigned based on specific identification.
Specific Identification—Perpetual:
Goods purchased
Cost of Goods Sold
Inventory Balance
Date
# of units
Cost per unit
# of units sold
Cost per unit
Cost of Goods Sold
# of units
Cost per unit
Inventory Balance
December 7…
Part 1
1. Benjo's Battery Store sells two brands of battery: Silver and Gold. Purchases for the
month of June consisted of 30 silver brand units at 1,500 each and 20 gold brand units
at 1,800 each. At the end of the month an inventory count showed that 12 silver brand
units and 5 gold brand units were still on hand.
Required:
a. Compute for each brand: purchases, merchandise inventory at the end of June and
cost of sales.
b. Assume a silver brand sells for 2,400 and a gold brand sells for 2,750. Compute for
each brand: sales revenue and gross income on sales.
2. Still using No. 1. Assume that is the following month another 25 silver brand units and
20 gold brand units were purchased from the suppliers at the same prices. At the end of
the month only 18 silver brand units and 10 gold units were on hand.
Compute for each brand: cost of purchases, total goods available for sale,
merchandise inventory end of July and the cost of sales. (use the latest cost prices)
b. Assuming the same…
Chapter 3 Solutions
Survey Of Accounting
Ch. 3 - 1. Define merchandise inventory. What types of...Ch. 3 - 2. What is the difference between a product cost...Ch. 3 - 3. How is the cost of goods available for sale...Ch. 3 - 4. What portion of cost of goods available for...Ch. 3 - 5. When are period costs expensed? When are...Ch. 3 - 6. If PetCo had net sales of 600,000, goods...Ch. 3 - Prob. 7QCh. 3 - 8. What are the effects of the following types of...Ch. 3 - 9. Northern Merchandising Company sold inventory...Ch. 3 - 10. If goods are shipped FOB shipping point, which...
Ch. 3 - 11. Define transportation-in. Is it a product or a...Ch. 3 - Prob. 12QCh. 3 - Prob. 13QCh. 3 - 14. Dyer Department Store purchased goods with the...Ch. 3 - 15. Eastern Discount Stores incurred a 5,000 cash...Ch. 3 - 16. What is the purpose of giving credit terms to...Ch. 3 - Prob. 17QCh. 3 - 18. Ball Co. purchased inventory with a list price...Ch. 3 - 22. Explain the difference between purchase...Ch. 3 - Prob. 20QCh. 3 - Prob. 21QCh. 3 - 25. What is the advantage of using common size...Ch. 3 - 27. What is the purpose of preparing a schedule of...Ch. 3 - 28. Explain how the periodic inventory system...Ch. 3 - Prob. 25QCh. 3 - Exercise 3-1 Determining the cost of financing...Ch. 3 - Exercise 3-2 Comparing a merchandising company...Ch. 3 - Exercise 3-3 Effect of inventory transactions on...Ch. 3 - Exercise 3-4 Effect of inventory transactions on...Ch. 3 - Exercise 3-5 Recording inventory transactions in a...Ch. 3 - Exercise 4-6A Understanding the freight terms FOB...Ch. 3 - Exercise 3-7 Effect of purchase returns and...Ch. 3 - Exercise 3-8 Accounting for product costs:...Ch. 3 - Effect of product cost and period cost: Horizontal...Ch. 3 - Cash Discounts and Purchase Returns On April 6,...Ch. 3 - Exercise 4-9A Determining the effect of inventory...Ch. 3 - Inventory financing costs Bill Norman comes to you...Ch. 3 - Effect of shrinkage: Perpetual system Ho Designs...Ch. 3 - Comparing gross margin and gain on sale of land...Ch. 3 - Single-step and multistep income statements The...Ch. 3 - Prob. 16ECh. 3 - Effect of cash discounts on financial statements:...Ch. 3 - Using common size statements and ratios to make...Ch. 3 - Prob. 19ECh. 3 - Determining cost of goods sold: Periodic system...Ch. 3 - Identifying product and period costs Required...Ch. 3 - Problem 4-23A Identifying freight costs Required...Ch. 3 - Effect of purchase returns and allowances and...Ch. 3 - Preparing a schedule of cost of goods sold and...Ch. 3 - Prob. 25PCh. 3 - Comprehensive cycle problem: Perpetual system At...Ch. 3 - Prob. 27PCh. 3 - Comprehensive cycle problem: Periodic system...Ch. 3 - Prob. 1ATCCh. 3 - ATC 3-2 Group Exercise Multistep income statement...Ch. 3 - Prob. 3ATCCh. 3 - Prob. 4ATC
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- Required information Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases. Also, on December 15, Monson sells 25 units for $25 each. Purchases on December 7 Purchases on December 14 Purchases on December 21 15 units @ $1.00 cost 30 units ē $15.00 cost 25 units @ $18.00 cost Required: Monson uses a perpetual inventory system. Determine the costs assigned to the December 31 ending inventory based on the FIFO method. Perpetual FIFO: Goods Purchased Cost of Goods Sold # of Units Sold Inventory Balance # of Units Cost Per Unit Goods Purchased Cost Per Cost of Goods Unit # of Units Cost Per Unit Inventory Balance Date Sold December 7 December 14arrow_forwardRequlred Informatlon Trey Monson starts a merchandising business on December 1 and enters into three inventory purchases: Purchases on December 7 16 units @ $1e.00 cost 33 units @ $15.00 cost 26 units e $18.00 cost Purchases on December 14 Purchases on December 21 Requlred: Monson sells 26 units for $25 each on December 15. Assume the periodic inventory system is used. Determine the costs assigned to the December 31 ending inventory when costs are assigned based on FIFO. Periodic FIFO: Cost of Goods Available for Sale Cost of Goods Sold Inventory Balance Cost of Goods Available for # of units sold # of units Cost per Cost per unit Goods Sold Cost of Cost Ending # of units in ending inventory unit per unit Inventory Sale Purchases: December 7 December 14 December 21 Totalarrow_forwardView Policies Current Attempt in Progress The Sunland Hat Shop Limited counted the entire inventory in its store on August 31 and arrived at a total inventory cost of $100,400. The count included $6,900 of inventory held on consignment for a local designer; $490 of inventory that was being held for customers who were deciding if they actually wanted to purchase the merchandise: and $1,100 of inventory that had been sold to customers but was being held for alterations. There were two shipments of inventory received on September 1. The first shipment cost $4,800. It had been shipped on August 29, terms FOB destination. The second shipment cost $5,150. plus freight charges of $240. It had been shipped on August 28, terms FOB shipping point. Neither of these shipments was included in the August 31 count. Calculate the correct cost of the inventory on August 31. Inventory cost eTextbook and Media Attempts: 0 of 2 used Submit Arswer Save fur Laterarrow_forward
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