homework%20solutions%20chapter%208a

homework%20solutions%20chapter%208a - E8-2 The second...

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E8-2 The second purchase for $4,000 shipped F.O.B. shipping point is included in the  inventory on December 31, 2007, since legal title to the goods is transferred to the  buyer at the shipping point.  The cost assigned to the purchase is $4,000 (net of any  purchases discounts) plus any payments directly associated with the inventory such as  freight, receiving, unpacking, inspecting, storage, insurance, applicable taxes, and  similar costs.  The first purchase of $3,000 shipped F.O.B. destination is excluded from  the inventory. E8-3 1. These goods are not included in inventory until they are actually received. 2. These purchases are included in inventory (unless they are goods received on  consignment).
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E8-3  (continued) 3. This product (unit sold) is included in inventory until received by the purchaser. 4. Since these purchases are still in the control of the Golosow Company, they are  included in inventory. 5. The product is included in inventory until shipped, if shipped F.O.B. shipping point, or  until they are received by the purchaser, if shipped F.O.B. destination. 6. This product is included in inventory. E8-4 Dec. Purchase Rebate Receivable ($25 x 1,100) 27,500 Inventory (or Purchases)  27,500 To account for rebate claimed on washing machines purchased this year. Jan.Cash  27,500 Purchase Rebate Receivable  27,500 To account for receipt of rebate on washing machines purchased last year. The effect of this rebate is to reduce the cost of each washing machine purchased  during the year by $25, thereby reducing the cost of the ending inventory by the  number of washing machines purchased this year and not sold multiplied by $25  per unit.  The rebate has no effect on the valuation of ending inventory if the LIFO  method is used and  all units purchased during the year are sold. E8-5 1. Inventory (or  Purchases)  20,000 Accounts Payable  20,000 To record inventory purchase; gross  price $20,000, terms of 2/10, n/30. Accounts Payable  20,000 Purchases Discounts Taken ($20,000 x 0.02)       400 Cash  19,600
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To record payment within the discount period.
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E8-5    (continued) 2. Inventory (or  Purchases)  19,600 Accounts Payable [$20,000 - ($20,000 x 0.02)]  19,600 To record inventory purchase; gross price $20,000, terms 2/10, n/30. Accounts Payable  19,600 Cash  19,600 To record payment within the discount period. E8-8 1. FIFO :  Cost of Goods Sold (650 units): June  6 300 units: 200 units @ $3.20 $   640 100 units @ $3.50      350 June 21 200 units: 100 units @ $3.50      350 100 units @ $3.60      360 June 27 150 units: 150 units @ $3.60      540   $2,240 Ending Inventory (300 units): Beginning Inventory + Purchases - Cost of Goods Sold = Ending Inventory (200 x $3.20) + [(200 x $3.50) + (250 x $3.60) + (300 x $3.65)] - $2,240 =   Ending Inventory
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