Chapter 8 - Sol. of assigned problems

Chapter 8 - Sol. of assigned problems - Chapter 8 Reporting...

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Chapter 8 Reporting and Interpreting Cost of Goods Sold and Inventory E8-1 To record the purchase of 80 new shirts in accordance with the cost principle (perpetual inventory system): Inventory (A). ................................................................. 2,880 Cash (A). ............................................................. 2,880 Cost: $2,600 + $165 + $115 = $2,880. The $260 interest amount is not included in the cost of the merchandise; it is initially recorded as prepaid interest expense and later as interest expense. E8-4 Computations: Cost of Goods Sold Revenue . ................................................... $1,586,596,000 Gross profit . ............................................... 540,360,000 = Cost of goods sold . .................................... $1,046,236,000 Purchases Simply rearrange the basic inventory model (BI + P – EI = COGS): P = COGS + EI - BI Cost of goods sold (see above). ...................... $1,046,236,000 + Ending inventory . ....................................... 243,482,000 Beginning inventory . .................................. (193,268,000 ) = Purchases . ................................................ $1,096,450,000
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E8-6 CASE A: Perpetual inventory system: January 14 Accounts receivable (A). ....................................................... 1,125 Sales (R) (25 units at $45). ............................................. 1,125 Cost of Goods Sold (E). ........................................................ 625 Inventory (A) (25 units at $25). ....................................... 625 April 9 Inventory (A) (15 units at $25). ............................................. 375 Accounts payable (L). ..................................................... 375 September 2 Accounts receivable (A). ....................................................... 2,500 Sales (R) (50 units at $50). ............................................. 2,500 Cost of Goods Sold (E). ........................................................ 1,250 Inventory (A) (50 units at $25). ....................................... 1,250 End of year No year-end adjusting entry needed because the number of units left at year end is 100 – 25 + 15 – 50 = 40, which is equal to the physical count of units available at year end. CASE B: Periodic inventory system: January 14 Accounts receivable (A). ....................................................... 1,125 Sales (R) (25 units at $45). ............................................. 1,125 April 9 Purchases (T) (15 units at $25). ........................................... 375 Accounts payable (L). ..................................................... 375 September 2 Accounts receivable (A). ....................................................... 2,500 Sales (R) (50 units at $50). ............................................. 2,500 End of year Cost of goods sold (E). ......................................................... 2,875 Purchases (T) . ................................................................ 375
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Chapter 8 - Sol. of assigned problems - Chapter 8 Reporting...

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