FINANCIAL ACCOUNTING W/CONNECT PKG
FINANCIAL ACCOUNTING W/CONNECT PKG
10th Edition
ISBN: 9781264094639
Author: Libby
Publisher: MCG
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Chapter 7, Problem 2P

1. (a)

To determine

Compute the cost of goods available for sale.

1. (a)

Expert Solution
Check Mark

Answer to Problem 2P

Determine cost of goods available for sale.

DateParticularsUnits ($)Unit cost ($)Total cost ($)
(a)(b)(c = a × b)
January 1Beginning inventory40031,200
January 30Purchased3003.41,020
May 1Purchased46041,840
Total1,160$4,060
Less: Goods sold860
Ending inventory300

Table (1)

Explanation of Solution

Cost of goods sold:

Cost of goods sold is the accumulate total of all direct cost incurred in manufacturing the goods or the products which has been sold during a period. Cost of goods sold involves direct material, direct labor, and manufacturing overheads.

Conclusion

Therefore, the cost of goods sold available for sale for 300 units of inventory is $4,060.

1. (b) and (c)

To determine

Compute the ending inventory and the cost of goods sold under weighted average-cost method.

1. (b) and (c)

Expert Solution
Check Mark

Explanation of Solution

In Average Cost Method the cost of inventory is priced at the average rate of the goods available for sale. Following is the mathematical representation:

Average Cost=Total Cost of Goods Available For SaleTotal Number of Units Available For Sale

Determine cost of ending inventory under average-cost method.

DateParticularsUnitsUnit cost ($)Total cost ($)
(a)(b)(c = a × b)
Cost of goods available for sale1,1603.54,060
Less: Ending inventory3003.51,050
Cost of goods sold8603.5$3,010

Table (2)

Working note:

Determine average unit cost.

averageunitcost=CostofgoodsavailableforsaleTotalunitsavailableforsales=$4,0601,160=$3.5per unit

Conclusion

Hence, the cost of goods sold under average-cost method is $3,010 and the value of ending inventory is $1,050.

2. (a)

To determine

Compute the cost of goods available for sale.

2. (a)

Expert Solution
Check Mark

Answer to Problem 2P

Determine cost of goods available for sale.

DateParticularsUnits ($)Unit cost ($)Total cost ($)
(a)(b)(c = a × b)
January 1Beginning inventory40031,200
January 30Purchased3003.41,020
May 1Purchased46041,840
Total1,160$4,060
Less: Goods sold860
Ending inventory300

Table (3)

Explanation of Solution

Cost of goods sold:

Cost of goods sold is the accumulate total of all direct cost incurred in manufacturing the goods or the products which has been sold during a period. Cost of goods sold involves direct material, direct labor, and manufacturing overheads.

Conclusion

Therefore, the cost of goods sold available for sale for 300 units of inventory is $4,060.

2. (b) and (c)

To determine

Compute the ending inventory and the cost of goods sold under FIFO.

2. (b) and (c)

Expert Solution
Check Mark

Explanation of Solution

In First-in-First-Out method, the cost of initial purchased items is sold first. The value of the ending inventory consist the recent purchased items.

Determine the amount of cost of goods sold.

DateParticularsUnitsUnit cost ($)Total cost ($)
(a)(b)(c = a × b)
January 1Beginning inventory40031,200
January 30Purchased3003.41,020
May 1Purchased1604640
Cost of goods sold3,350$2,860

Table (4)

Determine ending inventory under FIFO method.

DateParticularsUnitsUnit cost ($)Total cost ($)
(a)(b)(c = a × b)
May 1Purchased30041,200
Ending inventory300$1,200

Table (5)

Conclusion

Hence, the cost of goods sold under FIFO is $2,860 and the value of ending inventory is $1,200.

3. (a)

To determine

Compute the cost of goods available for sale.

3. (a)

Expert Solution
Check Mark

Answer to Problem 2P

Determine cost of goods available for sale.

DateParticularsUnits ($)Unit cost ($)Total cost ($)
(a)(b)(c = a × b)
January 1Beginning inventory40031,200
January 30Purchased3003.41,020
May 1Purchased46041,840
Total1,160$4,060
Less: Goods sold860
Ending inventory300

Table (6)

Explanation of Solution

Cost of goods sold:

Cost of goods sold is the accumulate total of all direct cost incurred in manufacturing the goods or the products which has been sold during a period. Cost of goods sold involves direct material, direct labor, and manufacturing overheads.

Conclusion

Therefore, the cost of goods sold available for sale for 300 units of inventory is $4,060.

3. (b) and (c)

To determine

Compute the ending inventory and the cost of goods sold under LIFO.

3. (b) and (c)

Expert Solution
Check Mark

Explanation of Solution

In Last-in-First-Out method, the cost of last purchased items is sold first. The value of the closing stock consist the initial purchased items.

Determine the amount of cost of goods sold.

DateParticularsUnitsUnit cost ($)Total cost ($)
(a)(b)(c = a × b)
May 1Purchased46041,840
January 30Purchased3003.41,020
January 1Beginning inventory1003300
Cost of goods sold860$3,160

Table (7)

Determine ending inventory under LIFO method.

DateParticularsUnitsUnit cost ($)Total cost ($)
(a)(b)(c = a × b)
January 1Beginning inventory3003900
Ending inventory300$900

Table (8)

Conclusion

Hence, the cost of goods sold under LIFO is $3,160 and the value of ending inventory is $900.

4. (a)

To determine

Compute the cost of goods available for sale.

4. (a)

Expert Solution
Check Mark

Answer to Problem 2P

Determine cost of goods available for sale.

DateParticularsUnits ($)Unit cost ($)Total cost ($)
(a)(b)(c = a × b)
January 1Beginning inventory40031,200
January 30Purchased3003.41,020
May 1Purchased46041,840
Total1,160$4,060
Less: Goods sold860
Ending inventory300

Table (9)

Explanation of Solution

Cost of goods sold:

Cost of goods sold is the accumulate total of all direct cost incurred in manufacturing the goods or the products which has been sold during a period. Cost of goods sold involves direct material, direct labor, and manufacturing overheads.

Conclusion

Therefore, the cost of goods sold available for sale for 300 units of inventory is $4,060.

4. (b) and (c)

To determine

Compute the ending inventory and the cost of goods sold under specific identification method.

4. (b) and (c)

Expert Solution
Check Mark

Explanation of Solution

Specific identification method can be said as identifying the items precisely which are being sold and those which are being stored as closing inventory. The companies are required to keep perfect records of the original cost of each and every individual items of the inventory.

Determine the amount of cost of goods sold.

DateParticularsUnitsUnit cost ($)Total cost ($)
(a)(b)(c = a × b)
January 1Beginning inventory (1)643192
January 1Beginning inventory (3)33631,008
January 30Purchased (2)963.4326.4
May 1Purchased (4)36441,456
Cost of goods sold3,350$2,982.4

Table (10)

Determine ending inventory under Specific identification method.

DateParticularsUnitsUnit cost ($)Total cost ($)
(a)(b)(c = a × b)
May 1Purchased964384
January 30Purchased2043.4693.6
Ending inventory2,150$1,077.6

Table (11)

Working note:

Determine the units of sale:

For first Sale:

FINANCIAL ACCOUNTING W/CONNECT PKG, Chapter 7, Problem 2P , additional homework tip  1 Units of sale=Sales×25=160 Units×25=64 Units (1)

FINANCIAL ACCOUNTING W/CONNECT PKG, Chapter 7, Problem 2P , additional homework tip  2 Units of sale=Sales×35=160 Units×35=96 Units (2)

For second Sale:

FINANCIAL ACCOUNTING W/CONNECT PKG, Chapter 7, Problem 2P , additional homework tip  3 Units of sale for second sales=Remainingbeginninginventory×Unit cost=(40064) Units×$3=336 Units×$3=$1,008 (3)

FINANCIAL ACCOUNTING W/CONNECT PKG, Chapter 7, Problem 2P , additional homework tip  4 Units of sale for second sales=Remaininginventory×Unit cost=(700336) Units×$4=364 Units×$4=$1,456 (4)

Conclusion

Hence, the cost of goods sold under specific identification method is $2,982.4 and the value of ending inventory is $1,077.6.

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Chapter 7 Solutions

FINANCIAL ACCOUNTING W/CONNECT PKG

Ch. 7 - 1. Consider the following information: ending...Ch. 7 - 2. The inventory costing method selected by a...Ch. 7 - 3. Which of the following is not a component of...Ch. 7 - 4. Consider the following information: beginning...Ch. 7 - 5. Consider the following information: beginning...Ch. 7 - 6. An increasing inventory turnover...Ch. 7 - Prob. 7MCQCh. 7 - Which of the following regarding the lower of cost...Ch. 7 - 9. Which inventory method provides a better...Ch. 7 - Which of the following is false regarding a...Ch. 7 - Matching Inventory Items to Type of Business Match...Ch. 7 - Recording the Cost of Purchases for a...Ch. 7 - Identifying the Cost of Inventories for a...Ch. 7 - JCPenney Company, Inc., is a major department...Ch. 7 - M7-5 Matching Financial Statement Effects to...Ch. 7 - M7-6 Matching Inventory Costing Method Choices to...Ch. 7 - M7-7 Reporting Inventory under Lower of Cost or...Ch. 7 - M 7-8 Determining the Effects of Inventory...Ch. 7 - Determining the Financial Statement Effects of...Ch. 7 - Based on its physical count of inventory in its...Ch. 7 - Prob. 2ECh. 7 - Prob. 3ECh. 7 - Abercrombie and Fitch is a leading retailer of...Ch. 7 - Nittany Company uses a periodic inventory system....Ch. 7 - E7-6 Calculating Ending Inventory and Cost of...Ch. 7 - Emily Company uses a periodic inventory system. At...Ch. 7 - Givoly Inc. uses a periodic inventory system. At...Ch. 7 - Evaluating the Choice among Three Alternative...Ch. 7 - Following is partial information for the income...Ch. 7 - Daniel Company uses a periodic inventory system....Ch. 7 - H.T. Tan Company is preparing the annual financial...Ch. 7 - Sanchez Company was formed on January 1 of the...Ch. 7 - Dell Inc. is the leading manufacturer of personal...Ch. 7 - E7-1 5 Analyzing and Interpreting the Effects of...Ch. 7 - The following note was contained in a recent Ford...Ch. 7 - BorgWarner Inc. is a leading global supplier of...Ch. 7 - Several years ago, the financial statements of...Ch. 7 - Analyzing and Interpreting the Impact of an...Ch. 7 - Prob. 20ECh. 7 - E7-21 (Chapter Supplement A) Analyzing the Effects...Ch. 7 - Assume that a retailer’s beginning inventory and...Ch. 7 - Prob. 23ECh. 7 - Travis Company has just completed a physical...Ch. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Analyzing and Interpreting Income Manipulation...Ch. 7 - Prob. 5PCh. 7 - Jaffa Company prepared its annual financial...Ch. 7 - Evaluating the Effects of Manufacturing Changes on...Ch. 7 - An annual report for International Paper Company...Ch. 7 - The income statement for Pruitt Company summarized...Ch. 7 - P7-1 0 (Chapter Supplement A) Analyzing LIFO and...Ch. 7 - Prob. 1APCh. 7 - Prob. 2APCh. 7 - Prob. 3APCh. 7 - Analyzing and Interpreting the Effects of...Ch. 7 - Evaluating the Choice of Inventory Method When...Ch. 7 - Finding Financial Information Refer to the...Ch. 7 - Prob. 2CPCh. 7 - Refer to the financial statements of American...Ch. 7 - Using Financial Reports: Interpreting the Effect...Ch. 7 - Prob. 5CPCh. 7 - Prob. 6CPCh. 7 - Prob. 7CP
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