Chapter 6: 23E_a (page 364)
Question:Hot Bread Bakery reported Net sales revenue of
a. Ending merchandise inventory is overstated by $8,000.
The correct gross profit would be$3,000.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
Fit Gym began January with merchandise inventory of 78 crates of vitamins that cost a total of \(4,290. During the month, Fit Gym purchased and sold merchandise on account as follows:
Jan. 5 Purchase 156 crates @ \) 64 each
13 Sale 180 crates @ \( 100 each
18 Purchase 114 crates @ \) 75 each
26 Sale 150 crates @ $ 116 each
Requirements
2. Prepare a perpetual inventory record, using the LIFO inventory costing method, and determine the company’s cost of goods sold, ending merchandise inventory, and gross profit.
Question:Ward Hardware does not expect costs to change dramatically and wants to use an inventory costing method that averages cost changes.
Requirements
1. Which inventory costing method would best meet Ward’s goal?
2. Assume Ward wanted to expense out the newer purchases of goods instead.
Which inventory costing method would best meet that need?
Question:Golf Unlimited carries an inventory of putters and other golf clubs. The sales price of each putter is \(119. Company records indicate the following for a particular line ofGolf Unlimited’s putters:
Date Item Quantity Unit Cost
Nov. 1 Balance 24 \) 53
6 Sale 20
8 Purchase 30 70
17 Sale 30
30 Sale 2
Requirements
2. Journalize Golf Unlimiteds inventory transactions using the LIFO inventory costingmethod. (Assume purchases and sales are made on account.)
Question:Empire State Carpets’s books show the following data. In early 2020, auditors foundthat the ending merchandise inventory for 2017 was understated by
2019 | 2018 | 2017 | |
Net Sales Revenue | \( 220,000 | \) 162,000 | \( 176,000 |
Cost of Goods Sold: | |||
Beginning Merchandise Inventory | \)22,000 | \(29,000 | \)46,000 |
Net cost of purchase | 132,000 | 90,000 | 76,000 |
Cost of goods available for sale | 154,000 | 119,000 | 122,000 |
Less: Ending Merchandise Inventory | 32,000 | 22,000 | 29,000 |
Cost of goods sold | 122,000 | 97,000 | 93,000 |
Gross Profit | 98,000 | 65,000 | 83,000 |
Operating Expenses | 72,000 | 38,000 | 48,000 |
Net Income | \( 26,000 | \) 27,000 | $ 35,000 |
Requirements
1. Prepare corrected income statements for the three years.
Question:This problem continues the Crystal Clear Cleaning problem begun in Chapter 2 and continued through Chapter 5.
Consider the December transactions for Crystal Clear Cleaning that were presentedin Chapter 5. (Cost data have been removed from the sale transactions.) Crystal Clearuses the perpetual inventory system.
Dec. 2 Purchased 1,000 units of inventory for \(4,000 on account from Sparkle
Company on terms, 5/10, n/20.
5 Purchased 1,200 units of inventory from Borax on account with terms
4/10, n/30. The total invoice was for \)6,000, which included a \(300
freight charge.
7 Returned 300 units of inventory to Sparkle from the December 2
purchase.
9 Paid Borax.
11 Sold 500 units of goods to Happy Maids for \)5,500 on account with
termsn/30.
12 Paid Sparkle.
15 Received 100 units with a sales price of \(1,100 of goods back from
customer Happy Maids.
21 Received payment from Happy Maids, settling the amount due in full.
28 Sold 500 units of goods to Bridget, Inc. on account for \)6,500. Terms
1/15,n/30.
29 Paid cash for utilities of \(550.
30 Paid cash for Sales Commission Expense of \)214.
31 Received payment from Bridget, Inc., less discount.
31 Recorded the following adjusting entries:
a. Physical count of inventory on December 31 showed 800 units of
goods on hand.
b. Depreciation, \(150.
c. Accrued salaries expense of \)2,100.
d. Estimated sales returns of
e. Prepared all other adjustments necessary for December (Hint: You willneed to review the adjustment information in Chapter 3 to determinethe remaining adjustments). Assume the cleaning supplies left atDecember 31 are $50.
Requirements
2. Journalize the transactions for December 11th, 28th, and 31st (adjusting entry aonly) using the perpetual inventory record created in Requirement 1.
What do you think about this solution?
We value your feedback to improve our textbook solutions.
