Financial Accounting, Student Value Edition (5th Edition)
5th Edition
ISBN: 9780134728520
Author: Robert Kemp, Jeffrey Waybright
Publisher: PEARSON
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Chapter 5, Problem 6SE
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(Learning Objective 2: Compare inventory by three methods) SWAT Surplus beganMarch 2018 with 100 tents that cost $10 each. During the month, the company made the following purchases at cost:1826Mar 6 110 tents @ $20120 tents @ $2540 tents @ $30= $2,200= 3,000= 1,200The company sold 318 tents, and at March 31, the ending inventory consisted of 52 tents. Thesales price of each tent was $52.Requirements1. Determine the cost of goods sold and ending inventory amounts for March under theaverage-cost, FIFO, and LIFO costing methods. Round the average cost per unit to twodecimal places, and round all other amounts to the nearest dollar.2. Explain why cost of goods sold is highest under LIFO. Be specific.3. Prepare the SWAT Surplus income statement for March. Report gross profit. Operatingexpenses totaled $3,250. The company uses average costing for inventory. The income taxrate is 36%.
(Learning Objective 2: Apply various inventory costing methods) A Gold MedalSports outlet store began August 2018 with 42 pairs of running shoes that cost the store $31each. The sales price of these shoes was $63. During August, the store completed these inventory transactions:Units Unit CostSale ............. 16 $319 Purchase...... 81 33$6313 Sale ............. 26 31 63Sale ............. 33 6422 Sale ............. 36 33 6429 Purchase...... 18 35Aug 218 13Unit Sales PriceRequirements1. The preceding data are taken from the store’s perpetual inventory records. Which costmethod does the store use? Explain how you arrived at your answer.2. Determine the store’s cost of goods sold for August. Also compute gross profit for August.3. What is the cost of the store’s August 31 inventory of running shoes?
P5-5B. Journalizing inventory purchases, sales, returns, and freight transactions using the
perpetual inventory system; calculating gross profit (Learning Objectives 3, 4, 5, & 6) 25-30 min.
The following transactions for Westcoast Tire Co. occurred during July:
Jul Purchased $5,500 of merchandise on account from Meridian Tire Supply. Terms, 1/15, n/45,
4 FOB shipping point. Meridian Tire Supply prepaid the $475 shipping cost and added the amount
to the invoice.
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Purchased $300 of supplies on account from Office Express. Terms, 3/10, n/30, FOB
destination.
Sold $5,100 (cost, $2,800) of merchandise on account to P. Larson. Terms, 2/15, n/45, FOB
destination.
Paid $50 freight charges to deliver goods to P. Larson.
Returned $500 of the merchandise purchased on July 4 and received a credit.
Sold $900 (cost, $545) of merchandise to cash customers.
Paid for the supplies purchased on July 7.
Paid Meridian Tire Supply the amount due from the July 4 purchase in full.…
Chapter 5 Solutions
Financial Accounting, Student Value Edition (5th Edition)
Ch. 5 - Prob. 1DQCh. 5 - How are the financial statements of a manufacturer...Ch. 5 - What is a cost-flow assumption? Why is a cost-flow...Ch. 5 - If a company had two units that cost 1 each in its...Ch. 5 - Prob. 5DQCh. 5 - Prob. 6DQCh. 5 - Prob. 7DQCh. 5 - Prob. 8DQCh. 5 - Prob. 9DQCh. 5 - Prob. 10DQ
Ch. 5 - During April, Bargain Hardware made sales of...Ch. 5 - Prob. 2SCCh. 5 - Prob. 3SCCh. 5 - Prob. 4SCCh. 5 - Prob. 5SCCh. 5 - Prob. 6SCCh. 5 - Prob. 7SCCh. 5 - Prob. 8SCCh. 5 - Prob. 9SCCh. 5 - Prob. 10SCCh. 5 - Prob. 11SCCh. 5 - Prob. 12SCCh. 5 - Prob. 1SECh. 5 - Prob. 2SECh. 5 - Prob. 3SECh. 5 - Prob. 4SECh. 5 - Prob. 5SECh. 5 - Prob. 6SECh. 5 - Prob. 7SECh. 5 - Prob. 8SECh. 5 - Lower-of-cost-or-market rule (Learning Objective...Ch. 5 - Prob. 10SECh. 5 - Inventory principles and terminology (Learning...Ch. 5 - Prob. 12SECh. 5 - Prob. 13SECh. 5 - Prob. 14SECh. 5 - Prob. 15SECh. 5 - Prob. 16AECh. 5 - Prob. 17AECh. 5 - Prob. 18AECh. 5 - Prob. 19AECh. 5 - Prob. 20AECh. 5 - Prob. 21AECh. 5 - Prob. 22AECh. 5 - Prob. 23AECh. 5 - Prob. 24AECh. 5 - Prob. 25AECh. 5 - Prob. 26AECh. 5 - Prob. 27AECh. 5 - FIFO (Learning Objective 2) 10-15 min. Tee Time,...Ch. 5 - LIFO (Learning Objective 2) 10-15 min. Refer to...Ch. 5 - Prob. 30BECh. 5 - Prob. 31BECh. 5 - Prob. 32BECh. 5 - Prob. 33BECh. 5 - Prob. 34BECh. 5 - Prob. 35BECh. 5 - Prob. 36BECh. 5 - Prob. 37BECh. 5 - Prob. 38BECh. 5 - Prob. 39BECh. 5 - Computing LIFO and journalizing inventory...Ch. 5 - Prob. 41APCh. 5 - FIFO, LIFO, and average cost (Learning Objectives...Ch. 5 - Prob. 43APCh. 5 - Prob. 44APCh. 5 - Prob. 45APCh. 5 - Estimating ending inventory (Learning Objective 7)...Ch. 5 - Prob. 47APCh. 5 - Prob. 48BPCh. 5 - Prob. 49BPCh. 5 - FIFO, LIFO, and average cost (Learning Objectives...Ch. 5 - Prob. 51BPCh. 5 - Prob. 52BPCh. 5 - Prob. 53BPCh. 5 - Prob. 54BPCh. 5 - Prob. 55BPCh. 5 - Continuing Exercise This exercise continues the...Ch. 5 - Prob. 1CPCh. 5 - Prob. 1CFSAPCh. 5 - Prob. 1EIACh. 5 - Prob. 2EIACh. 5 - Prob. 1FACh. 5 - Prob. 1IACh. 5 - Prob. 1SBACh. 5 - Prob. 1WCCh. 5 - Comprehensive Problem The Accounting Cycle for a...
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- (Learning Objectives 4, 5: Compute gross profit; estimate inventory using the grossprofit method) Cleveland Company, a camera store, lost some inventory in a fire on October15. To file an insurance claim, the company must estimate its October 15 inventory using thegross profit method. For the past two years, Cleveland Company’s gross profit has averaged41% of net sales. Its inventory records reveal the following data:Inventory, October 1................ $ 57,700Transactions October 1–15:Purchases ................................. 490,800Purchase discounts................... 17,000Purchase returns....................... 70,900Sales......................................... 660,000Requirements1. Estimate the cost of the lost inventory using the gross profit method.2. Prepare the income statement for October 1 to October 15 for this product through grossprofit. Show the detailed computations of cost of goods sold in a separate schedule.arrow_forward(Learning Objective 2: Calculate purchases by analyzing inventory account activity)On Willow Grove Department Stores’ most recent balance sheet, the balance of its inventory at the beginning of the year was $12,000. At the end of the year, the inventory balancewas $14,500. During that year, its cost of goods sold was $55,000. All purchases of inventorythroughout the year were on account. What was the total of Willow Grove’s purchases duringthe year?arrow_forward(Learning Objective 2: Compare inventory by three methods) Navy Surplus beganJuly 2018 with 80 stoves that cost $10 each. During the month, the company made the following purchases at cost:1826July 6 90 stoves @ $20100 stoves @ $2530 stoves @ $30= $1,800= 2,500= 900The company sold 250 stoves, and at July 31, the ending inventory consisted of 50 stoves. Thesales price of each stove was $52.Requirements1. Determine the cost of goods sold and ending inventory amounts for July under the averagecost, FIFO, and LIFO costing methods. Round the average cost per unit to two decimalplaces, and round all other amounts to the nearest dollar.2. Explain why cost of goods sold is highest under LIFO. Be specific.3. Prepare the Navy Surplus income statement for July. Report gross profit. Operating expensestotaled $3,250. The company uses average costing for inventory. The income tax rate is 40%.arrow_forward
- Learning Objectives 1, 2: Show how to account for inventory in a perpetual systemusing the average-costing method) Western Trading Company purchases inventory in cratesof merchandise; each crate of inventory is a unit. The fiscal year of Western Trading ends eachJanuary 31. Assume you are dealing with a single Western Trading store in Nashville, Tennessee. The Nashville store began the year with an inventory of 20,000 units that cost a total of$1,060,000. During the year, the store purchased merchandise on account as follows:July (29,000 units at $59) ..................................... $1,711,000November (49,000 units at $63) ........................... 3,087,000December (59,000 units at $69)............................ 4,071,000Total purchases..................................................... $8,869,000Cash payments on account totaled $8,541,000. During fiscal year 2018, the store sold 155,000units of merchandise for $15,887,500, of which $4,900,000 was for cash and the balance…arrow_forwardneed complete and correct answer with workingarrow_forward(Learning Objectives 1, 2: Show how to account for inventory transactions; applythe FIFO cost method) Griffin Company’s inventory records for its retail division show thefollowing at December 31:Dec 1 Beginning inventory ............... 9 units @ $165 = $1,48515 Purchase................................. 5 units @ 166 = $ 83026 Purchase................................. 13 units @ 175 = $2,275At December 31, 11 of these units are on hand. Journalize the following for Griffin Companyunder the perpetual system:1. Total December purchases in one summary entry. All purchases were on credit.2. Total December sales and cost of goods sold in two summary entries. The selling price was$500 per unit, and all sales were on credit. Assume that Griffin uses the FIFO inventorymethod.3. Under FIFO, how much gross profit would Griffin earn for the month ending December 31?What is the FIFO cost of Griffin Company’s ending inventory?arrow_forward
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- please help with all working and steps answer in text thank you so mucharrow_forwardPrepare the appropriate journal entries for each transaction under a perpetual inventory systemarrow_forwardRequired information Use the following information for the Quick Study below. (Algo) (11-14) Skip to question [The following information applies to the questions displayed below.]Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases. Monson uses a perpetual inventory system. Also, on December 15, Monson sells 15 units for $23 each. Purchases on December 7 10 units @ $9.00 cost Purchases on December 14 20 units @ $15.00 cost Purchases on December 21 15 units @ $17.00 cost QS 5-12 (Algo) Perpetual: Inventory costing with LIFO LO P1 Determine the costs assigned to ending inventory when costs are assigned based on the LIFO method.arrow_forward
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