(2301) Ch 6 In Class Practice Solutions(1).docx - Principles of Financial Accounting(2301 Chapter 6 – In Class Practice Solutions E6-14 Using

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Principles of Financial Accounting (2301) Chapter 6 – In Class Practice Solutions E6-14 Using accounting vocabulary Learning Objectives 1, 2 Match the accounting terms with the corresponding definitions. 1. Specific identification 2. Materiality concept 3. Last-in, first-out (LIFO) 4. Conservatism 5. Consistency principle 6. Weighted-average 7. Disclosure principle 8. First-in, first-out (FIFO) a. Treats the oldest inventory purchases as the first units sold. b. Requires that a company report enough information for outsiders to make knowledgeable decisions. c. Identifies exactly which inventory item was sold. Usually used for higher cost inventory. d. Calculates a weighted-average cost based on the cost of goods available for sale and the number of units available. e. Principle whose foundation is to exercise caution in reporting financial statement items. f. Treats the most recent/newest purchases as the first units sold. g. Businesses should use the same accounting methods from period to period. h. Principle that states significant items must conform to GAAP. SOLUTION 1. c 2. h 3. f 4. e 5. g 6. d
7. b 8. a Use the following information to answer Exercises E6-16 through E6-18. 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 of Golf 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 E6-16 Measuring and journalizing merchandise inventory and cost of goods sold—FIFO Learning Objective 2 1. COGS \$3,232 Requirements 1. Prepare a perpetual inventory record for the putters assuming Golf Unlimited uses the FIFO inventory costing method. Then identify the cost of ending inventory and cost of goods sold for the month.

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