Financial Accounting
3rd Edition
ISBN: 9780133791129
Author: Jane L. Reimers
Publisher: Pearson Higher Ed
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Chapter 5, Problem 34EB
1.
To determine
Calculate the cost of goods sold that will appear on the income statement under weighted average
2.
To determine
Calculate the cost of inventory that will appear on the
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Chapter 5 Solutions
Financial Accounting
Ch. 5 - In each separate situation, identify which company...Ch. 5 - Prob. 2YTCh. 5 - Prob. 3YTCh. 5 - Prob. 4YTCh. 5 - Prob. 5YTCh. 5 - Jaynes Jewelry Store purchased three diamond and...Ch. 5 - Prob. 7YTCh. 5 - Prob. 8YTCh. 5 - Prob. 9YTCh. 5 - Prob. 1Q
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- At the end of last year, Helen's, Inc. (uses a periodic inventory system with a physical inventory count taken only at year-end) had merchandise costing $115,000 in inventory. During January of the current year, the company purchased merchandise costing $35,000, and sold merchandise which it had purchased at a total cost of $55,000. Based on the foregoing information,the total debited to the inventory account during January was:arrow_forwardHalifax Fisheries Inc. began the month of March with $760,000 of current assets, a current ratio of 2.5 to 1, and a quick ratio of 1.1 to 1. During the month, it completed the following transactions:Mar. 6 Bought $86,000 of merchandise on account. (The company uses a perpetual inventory system.) 11 Sold merchandise that cost $70,000 for $118,000. 15 Collected a $30,000 account receivable. 17 Paid a $32,000 account payable. 19 Wrote off a $14,000 bad debt against Allowance for Doubtful Accounts. 24 Declared a $1.75 per share cash dividend on the 41,000 outstanding common shares. 28 Paid the dividend declared on March 24. 29 Borrowed $90,000 by giving the bank a 30-day, 19% note. 30 Borrowed $110,000 by signing a long-term secured note. 31 Used the $200,000 proceeds of the notes to buy additional machinery.Required:Prepare a schedule showing Halifax Fisheries Inc.’s current ratio, quick ratio, and working capital after each of the transactions. (Round ratios to 2 decimal places and other…arrow_forward[The following information applies to the questions displayed below.] Home Hardware reported beginning inventory of 30 shovels, for a total cost of $90. The company had the following transactions during the month: January 2 Sold 7 shovels on account at a selling price of $10 per unit. January 16 Sold 12 shovels on account at a selling price of $10 per unit. January 18 Bought 4 shovels on account at a cost of $3 per unit. January 19 Sold 12 shovels on account at a selling price of $10 per unit. January 24 Bought 12 shovels on account at a cost of $3 per unit. January 31 Counted inventory and determined that 13 units were on hand. 3-a. What is the dollar amount of shrinkage that you were able to determine in periodic inventory system? 3-b. What is the dollar amount of shrinkage that you were able to determine in perpetual inventory system? Do not give answer in imagearrow_forward
- Butter Company took a physical inventory at the end of the year and determined that $190,000 of goods were on hand. In addition, the entity determined that $24,000 of goods purchased were in transit shipped FOB destination. The goods were actually received three days after the inventory count. The entity sold $10,000 worth of inventory FOB destination. Such inventory is in transit at year-end. What amount should be reported as inventory at year-end? Select one: a. $214,000 b. $190,000 c. $200,000 d. $224,000arrow_forwardAt the beginning of the year, Snaplt had $10,000 of inventory. During the year, Snaplt purchased $35, 000 of merchandise and sold $30,000 of merchandise. A physical count of inventory at year-end shows $14,000 of inventory exists. Prepare the entry to record inventory shrinkage.arrow_forwardDuring its first year of operation, Archer Company purchased 5,600 units of a product at $21 per unit. During the second year, it purchased 6,000 units of the same product at $24 per unit. During the third year, it purchased 5,000 units at $30 per unit. Archer managed to have an ending inventory each year of 1,000 units. The company uses the periodic inventory system.Prepare cost of goods sold statements that compare the value of ending inventory and the cost of goods sold for each of the three years using 1.the FIFO inventory costing method. 2.the LIFO method. 3.From the resulting data, what conclusions can you draw about the relationships between the changes in unit price and the changes in the value of ending inventory?arrow_forward
- TS Quilts Inc. took a physical inventory at the end of the year and determined that $414,000 of goods were on hand. TS Inc. determined that $12,000 of goods held and included in the court were being held on consignment from PDJ outlet. Additionally, because of high rates of return on some products, TS has established an estimate of items that will be returned of $17,000. What amount should TS report in their year-end balance sheet for the inventory account?arrow_forwardPlum Corporation began the month of May with $1,300,000 of current assets, a current ratio of 1.80:1, and an acid-test ratio of 1.40:1. During the month, it completed the following transactions (the company uses a perpetual inventory system). May 2 Purchased $75,000 of merchandise inventory on credit. May 8 Sold merchandise inventory that cost $45,000 for $150,000 cash. May 10 Collected $23,000 cash on an account receivable. May 15 Paid $31,500 cash to settle an account payable. May 17 Wrote off a $5,000 bad debt against the Allowance for Doubtful Accounts account. May 22 Declared a $1 per share cash dividend on its 58,000 shares of outstanding common stock. May 26 Paid the dividend declared on May 22. May 27 Borrowed $115,000 cash by giving the bank a 30-day, 10% note. May 28 Borrowed $130,000 cash by signing a long-term secured note. May 29 Used the $245,000 cash proceeds from the notes to buy new machinery. Required: Complete the table below showing Plum's…arrow_forwardOn Cherry Blossom Department Stores' most recent balance sheet, the balance of its inventory at the beginning of the year was $11,000. At the end of the year, the inventory balance was $17,500. During that year, its cost of goods sold was $59,000. All purchases of inventory throughout the year were on account. What was the total of Cherry Blossom's purchases during the year?arrow_forward
- During the year, Trombley Incorporated has the following inventory transactions.For the entire year, the company sells 81 units of inventory for $30 each. Required: 1. Using FIFO, calculate (a) ending inventory, (b) cost of goods sold, (c) sales revenue, and (d) gross profit. 2. Using LIFO, calculate (a) ending inventory, (b) cost of goods sold, (c) sales revenue, and (d) gross profit. 3. Using weighted-average cost, calculate (a) ending inventory, (b) cost of goods sold, (c) sales revenue, and (d) gross profit. 4. Determine which method will result in higher profitability when inventory costs are declining.arrow_forwardPlum Corporation began the month of May with $1,200,000 of current assets, a current ratio of 2.50:1, and an acid - test ratio of 1.40:1. During the month, it completed the following transactions (the company uses a perpetual inventory system). May 2 Purchased $70,000 of merchandise inventory on credit. May 8 Sold merchandise inventory that cost $45,000 for $130,000 cash. May 10 Collected $26,000 cash on an account receivable. May 15 Paid $30,000 cash to settle an account payable. May 17 Wrote off a $5,000 bad debt against the Allowance for Doubtful Accounts account. May 22 Declared a $1 per share cash dividend on its 67,000 shares of outstanding common stock. May 26 Paid the dividend declared on May 22. May 27 Borrowed $115,000 cash by giving the bank a 30-day, 10% note. May 28 Borrowed $140,000 cash by signing a long-term secured note. May 29 Used the $255,000 cash proceeds from the notes to buy new machinery. Required: Complete the table below showing Plum's (1) current ratio, (2)…arrow_forwardPlum Corporation began the month of May with $700,000 of current assets, a current ratio of 2.50:1, and an acid-test ratio of 1.10:1. During the month, it completed the following transactions (the company uses a perpetual inventory system). May 2 Purchased $50,000 of merchandise inventory on credit. May 8 Sold merchandise inventory that cost $55,000 for $110,000 cash. May 10 Collected $20,000 cash on an account receivable. May 15 Paid $22,000 cash to settle an account payable. May 17 Wrote off a $5,000 bad debt against the Allowance for Doubtful Accounts account. May 22 Declared a $1 per share cash dividend on its 50,000 shares of outstanding common stock. May 26 Paid the dividend declared on May 22. May 27 Borrowed $100,000 cash by giving the bank a 30-day, 10% note. May 28 Borrowed $80,000 cash by signing a long-term secured note. May 29 Used the $ 180,000 cash proceeds from the notes to buy new machinery. Required: Complete the table below showing Plum's (1) current ratio, (2)…arrow_forward
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Financial ratio analysis; Author: The Finance Storyteller;https://www.youtube.com/watch?v=MTq7HuvoGck;License: Standard Youtube License