Financial Accounting
3rd Edition
ISBN: 9780133791129
Author: Jane L. Reimers
Publisher: Pearson Higher Ed
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Chapter 5, Problem 6YT
Jayne’s Jewelry Store purchased three diamond and emerald bracelets during March. The price of diamonds has fluctuated wildly during the month, causing the supplying firm to change the price of the bracelets it sells to Jayne’s Jewelry Store.
- a. On March 5, the first bracelet cost $4,600.
- b. On March 15, the second bracelet cost $5,100.
- c. On March 20, the third bracelet cost $3,500.
Suppose Jayne’s Jewelry Store sold two of these bracelets for $7,000 each.
- 1. Using FIFO, what is the cost of goods sold for these sales? What is the gross profit?
- 2. Using LIFO, what is the cost of goods sold for these sales? What is the gross profit?
- 3. Using weighted average cost, what is the cost of goods sold?
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Dawes Designs buys T-shirts for clubs, teams, and other organizations. Dawes takes the shirts and adds the organization's logo. Because of the uncertainty in the timing of the sales and to avoid stock outages, Dawes tries to maintain an inventory of shirts equal to two-month's of sales. The shirts cost $16.50 each and must be paid for in cash. On June 30 of the current year, the company expects to have 16,600 shirts in stock. Sales estimates, based on contracts received and historical data, are as follows for the next six months:
July
8,020
August
10,990
September
8,460
October
9,010
November
6,480
December
5,160
Required:
a. & b. Estimate purchases (in units) and cash required to make purchases in July, August, and September.
DAWES DESIGNS
Merchandise Purchases Budget
For the Period Ended March 31
(in units)
July
August
September
Units to be purchased
??
??
??
Estimated cost
$
??
$
??
$
??
Dawes Designs buys T-shirts for clubs, teams, and other organizations. Dawes takes the shirts and adds the organization's logo.
Because of the uncertainty in the timing of the sales and to avoid stock outages, Dawes tries to maintain an inventory of shirts equal to
two-month's of sales. The shirts cost $16.50 each and must be paid for in cash. On June 30 of the current year, the company expects
to have 16,600 shirts in stock. Sales estimates, based on contracts received and historical data, are as follows for the next six months:
July
August
September
October
November
December
8,020
10,990
8,460
9,010
6,480
5,160
Required:
a. & b. Estimate purchases (in units) and cash required to make purchases in July, August, and September.
Units to be purchased
DAWES DESIGNS
Merchandise Purchases Budget
For the Period Ended March 31
(in units)
July
August
September
During February, the last month of the fiscal year, Be My Valentine Ltd. sells $21,400 of gift cards. From experience, management
estimates that 8% of the gift cards sold will not be redeemed by customers. In March, $4,600 of these cards is redeemed for
merchandise with a cost of $2,500. In April, further $13,800 of these cards is redeemed for merchandise with a cost of $4,600. The
company uses a perpetual inventory system.
Also in February, Be My Valentine had $1,000 of unused gift cards that were over one year old and were not expected to be used. The
amount was in line with the company's normal breakage and all other gift cards of the same age had been used.
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
Ch. 5 - What is the difference between freight-in and...Ch. 5 - What is the difference between a purchase return...Ch. 5 - What is a purchase discount? What is the effect of...Ch. 5 - Prob. 5QCh. 5 - Prob. 6QCh. 5 - Prob. 7QCh. 5 - What is the difference between a periodic and...Ch. 5 - What is inventory shrinkage?Ch. 5 - What is the difference between the physical flow...Ch. 5 - What are the common cost flow methods for...Ch. 5 - If inventory costs are rising, which method (FIFO,...Ch. 5 - If inventory costs are rising, which method (FIFO,...Ch. 5 - Does LIFO or FIFO give the bestmost currentbalance...Ch. 5 - How do taxes affect the choice between LIFO and...Ch. 5 - Does the periodic or perpetual choice affect the...Ch. 5 - What is the lower-of-cost-or-market rule and why...Ch. 5 - What does the gross profit percentage measure? How...Ch. 5 - What does the inventory turnover ratio measure?...Ch. 5 - What are some of the risks associated with...Ch. 5 - Prob. 1MCQCh. 5 - Prob. 2MCQCh. 5 - Prob. 3MCQCh. 5 - Prob. 4MCQCh. 5 - Prob. 5MCQCh. 5 - Prob. 6MCQCh. 5 - Prob. 7MCQCh. 5 - Prob. 8MCQCh. 5 - Prob. 9MCQCh. 5 - Prob. 10MCQCh. 5 - Prob. 1SEACh. 5 - Prob. 2SEACh. 5 - Prob. 3SEACh. 5 - Prob. 4SEACh. 5 - Prob. 5SEACh. 5 - Prob. 6SEACh. 5 - Prob. 7SEACh. 5 - Prob. 8SEACh. 5 - The following information pertains to item #007SS...Ch. 5 - Prob. 10SEACh. 5 - Prob. 11SEBCh. 5 - Prob. 12SEBCh. 5 - Prob. 13SEBCh. 5 - Prob. 14SEBCh. 5 - Prob. 15SEBCh. 5 - Prob. 16SEBCh. 5 - Prob. 17SEBCh. 5 - Given the following information, calculate the...Ch. 5 - Prob. 19SEBCh. 5 - Prob. 20SEBCh. 5 - Prob. 21EACh. 5 - Prob. 22EACh. 5 - Prob. 23EACh. 5 - Prob. 24EACh. 5 - August 11Purchased four units at 400 each August...Ch. 5 - Prob. 26EACh. 5 - Prob. 27EACh. 5 - Prob. 28EACh. 5 - Prob. 29EACh. 5 - Prob. 30EACh. 5 - Given the following information, calculate the...Ch. 5 - Prob. 32EBCh. 5 - Prob. 33EBCh. 5 - Prob. 34EBCh. 5 - Prob. 35EBCh. 5 - Prob. 36EBCh. 5 - Prob. 37EBCh. 5 - Assume Radio Tech uses a perpetual inventory...Ch. 5 - Prob. 39EBCh. 5 - Prob. 40EBCh. 5 - Prob. 41EBCh. 5 - Prob. 42EBCh. 5 - Prob. 43PACh. 5 - Prob. 44PACh. 5 - Prob. 45PACh. 5 - The following transactions occurred during July...Ch. 5 - Prob. 47PACh. 5 - Prob. 48PACh. 5 - Calculate cost of goods sold and ending inventory;...Ch. 5 - Prob. 50PACh. 5 - Green Bay Cheese Company is considering changing...Ch. 5 - The following information is for Leos Solar...Ch. 5 - Prob. 53PACh. 5 - Prob. 54PBCh. 5 - Prob. 55PBCh. 5 - Prob. 56PBCh. 5 - Prob. 57PBCh. 5 - Prob. 58PBCh. 5 - Prob. 59PBCh. 5 - Calculate cost of goods sold and ending inventory;...Ch. 5 - Prob. 61PBCh. 5 - Castana Company is considering changing inventory...Ch. 5 - The following information is for Falling Numbers...Ch. 5 - Prob. 64PBCh. 5 - Prob. 1FSACh. 5 - Prob. 2FSACh. 5 - Prob. 3FSACh. 5 - Prob. 1CTPCh. 5 - Prob. 2CTP
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