ACCOUNTING
Help with Chapter 8 Homework

Help with Chapter 8 Homework - Help with Chapter 8 Homework...

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Help with Chapter 8 Homework Brief Exercise 8–1 Beginning inventory \$186,000 Plus: Purchases 945,000 Less: Cost of goods sold (982 ,000 ) Ending inventory \$149,000 Brief Exercise 8–4 Purchase price = 10 units x \$25,000 = \$250,000 December 28, 2016 Inventory ........................................................................................ 250,000 Accounts payable ...................................................................... 250,000 January 6, 2017 Accounts payable ........................................................................... 250,000 Cash (99% x \$250,000) ............................................................. 247,500 Inventory (1% x \$250,000) ....................................................... 2,500 Brief Exercise 8–5 December 28, 2016 Inventory ( 99% x \$250,000) .......................................................... 247,500 Accounts payable ..................................................................... 247,500 January 6, 2017 Accounts payable ........................................................................... 247,500 Cash ........................................................................................... 247,500 1

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Brief Exercise 8–10 Units liquidated 5,000 Difference in cost (\$30 – 25) x \$5 Before-tax LIFO liquidation profit \$25,000 Tax effect (\$25,000 x 40%) (10 ,000 ) LIFO liquidation profit \$15,000 Exercise 8–1 1. To record the purchase of inventory on account and the payment of freight charges. Inventory ........................................................................................ 5,000 Accounts payable ...................................................................... 5,000 Inventory ........................................................................................ 300 Cash ........................................................................................... 300 2. To record purchase returns. Accounts payable ........................................................................... 600 Inventory ................................................................................... 600 3. To record cash sales and cost of goods sold. Cash ............................................................................................... 5,200 Sales revenue ............................................................................ 5,200 Cost of goods sold ......................................................................... 2,800 Inventory ................................................................................... 2,800 2
Exercise 8–2 1. To record the purchase of inventory on account and the payment of freight charges. Purchases ....................................................................................... 5,000 Accounts payable ...................................................................... 5,000 Freight-in ....................................................................................... 300 Cash ........................................................................................... 300 2. To record purchase returns. Accounts payable ........................................................................... 600 Purchase returns ........................................................................ 600 3. To record cash sales. Cash ............................................................................................... 5,200 Sales revenue ............................................................................ 5,200 NO ENTRY IS MADE FOR THE COST OF GOODS SOLD. 3

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Exercise 8–6 Inventory balance before additional transactions \$165,000 Add: 2. Goods shipped to Kwok f.o.b. shipping point on Dec. 28 17,000 3. Goods shipped to customer f.o.b. destination on December 27 22 ,000 Correct inventory balance \$204 ,000 4
Exercise 8–20 Units liquidated 10 ,000 Units liquidated multiplied by the difference between their current cost and acquisition cost: 8,000 x (\$12 – 9) = \$24,000 2,000 x (\$12 – 8) = 8 ,000 Before-tax LIFO liquidation profit \$32,000 When inventory quantity declines during a reporting period, liquidation of LIFO inventory layers carried at different costs that prevailed in prior year’s results in noncurrent costs being matched with current selling prices. If the resulting effect on income is material, it must be disclosed. In this case, the effect of the LIFO layer liquidation is to increase income (ignoring taxes) by \$32,000. 5

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Exercise 8–22 (Please note that Exercises numbers in computer are one off one on the rest of the exercises. For example, computer shows this as Exercise 8 – 23.) (\$ in millions) H OME D EPOT L OWE S Gross profit ratio = 27,390 = 34.8% 18,476 = 34.6% 78,812 53,417 Inventory turnover = 51,422 = 4.72 times 34,941 = 3.94 times 10,883.5 8,863.5 Average days = 365 = 77 days 365 = 93 days in inventory 4.72 3.94
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