Chapter 6 solution on discussion questions

# Chapter 6 solution on discussion questions - BUSI1002...

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BUSI1002 Introduction to Accounting Class Discussion Chapter 6 Suggested Solutions for Discussion Questions Ex. 6.4 a. Net sales - Cost of goods sold = Gross profit \$ 26,000,000 ? \$ 15,000,000 Cost of goods sold = \$11,000,000 b. Beginning inventory + Purchases - Cost of goods sold = Ending Inventory \$ 6,450,000 \$ 9,500,000 \$11,000,000 (from part a) \$4,950,000 c.The entry to record inventory shrinkage at the end of the year increased the Cost of Goods Sold account and reduced its Merchandise Inventory account by \$10,000. Thus, immediately prior to recording inventory shrinkage, the Cost of Goods Sold account had a debit balance of \$10,990,000 (\$11,000,000 computed in part a minus \$10,000), whereas the Merchandise Inventory account had a debit balance of \$4,960,000 (\$4,950,000 computed in part b plus \$10,000). Ex. 6.7 a. The amounts of beginning and ending inventory were determined by taking complete physical inventories at (or near) the ends of year 1 and year 2. “Taking a complete physical inventory” means physically counting the number of units of each product on hand and then determining the cost of this inventory by reference to per-unit purchase costs. (The inventory at the end of year 1 serves as the “beginning inventory” for year 2.) b. Computation of the cost of goods sold during year 2: Inventory (December 31, year 1) ………………………………………………. . \$2,800

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Chapter 6 solution on discussion questions - BUSI1002...

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