Ch06 - Chapter 6 Inventory and Cost of Goods Sold Short...

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Unformatted text preview: Chapter 6 Inventory and Cost of Goods Sold Short Exercises (10 min.) S 6-1 Billions Inventory 3.9 Cash... 3.9 Accounts Receivable. 19.4 Sales Revenue. 19.4 Cost of Goods Sold 4.2 Inventory... 4.2 Cash 18.9 Accounts Receivable. 18.9 Chapter 6 Inventory and Cost of Goods Sold 343 (10-15 min.) S 6-2 1. (Journal entries) Inventory.. 100,000 Accounts Payable. 100,000 Amounts Receivable 240,000 Sales Revenue... 240,000 Cost of Goods Sold.. 80,000 Inventory ($100,000 .80).. 80,000 Cash ($240,000 .20)... 48,000 Accounts Receivable... 48,000 2. (Financial statements) BALANCE SHEET Current assets: Inventory ($100,000 $80,000). $ 20,000 INCOME STATEMENT Sales revenue $240,000 Cost of goods sold.. 80,000 Gross profit $160,000 Financial Accounting 7/e Solutions Manual 344 (15-20 min.) S 6-3 a b c Average Cost FIFO LIFO Cost of goods sold: Average (24 $156.67) $3,760 FIFO $1,500 + (14 $160) $3,740 LIFO $3,200 + (4 $150) $3,800 Ending inventory: Average (6 $156.67) $ 940 FIFO (6 $160) 960 LIFO (6 $150) 900 Computations: Units sold = 24 (10 + 20 6) Units in ending inventory = 6 Average cost per unit = $156.67 ($1,500 + $3,200) (10 + 20) Cost per unit: First purchase = $150 ($1,500 10 = $150) Second purchase = $160 ($3,200 20 = $160) Chapter 6 Inventory and Cost of Goods Sold 345 (10-15 min.) S 6-4 Pinkie Copy Center Income Statement Year Ended December 31, 20XX Average FIFO LIFO Sales revenue (600 $20) $12,000 $12,000 $12,000 Cost of goods sold (600 $9.90*) 5,940 (100 $9) + (500 $10) 5,900 (600 $10) 6,000 Gross profit 6,060 6,100 6,000 Operating expenses 3,000 3,000 3,000 Net income $ 3,060 $ 3,100 $ 3,000 _____ * Average cost per unit: Beginning inventory (100 @ $9.20).. $ 920 Purchases (700 @ $10) 7,000 Goods available. $7,920 Average cost per unit $7,920 / 800 units $ 9.90 Financial Accounting 7/e Solutions Manual 346 (10-15 min.) S 6-5 Pinkie Copy Center Income Statement Year Ended December 31, 20XX Average FIFO LIFO Sales revenue (600 $20) $12,000 $12,000 $12,000 Cost of goods sold (600 $9.90*) 5,940 (100 $9) + (500 $10) 5,900 (600 $10) ______ ______ 6,000 Gross profit 6,060 6,100 6,000 Operating expenses 3,000 3,000 3,000 Income before income tax $ 3,060 $ 3,100 $ 3,000 Income tax expense (40%) $ 1,224 $ 1,240 $ 1,200 Method to maximize reported income (before tax)....
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Ch06 - Chapter 6 Inventory and Cost of Goods Sold Short...

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