Review Ch 9 ACCT 373

Review Ch 9 ACCT 373 - EXERCISE 9-4(10–15 minutes(a Cost...

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Unformatted text preview: EXERCISE 9-4 (10–15 minutes) (a) 12/31/10 Cost of Goods Sold ............................... 24,000 Inventory ....................................... 24,000 12/31/11 Cost of Goods Sold ............................... 20,000 Inventory ....................................... 20,000 (b) 12/31/10 Loss Due to Market Decline of Inventory ............................................. 24,000 Allowance to Reduce Inventory to Market .................................... 24,000 12/31/11 Allowance to Reduce Inventory to Market ............................................. 4,000* Recovery of Loss Due to Market Decline of Inventory ...... 4,000 EXERCISE 9-4 (Continued) *Cost of inventory at 12/31/10 .................................... $346,000 Lower-of-cost-or-market at 12/31/10 ....................... (322,000 ) Allowance amount needed to reduce inventory to market (a) ........................................................... $ 24,000 Cost of inventory at 12/31/11 ................................... $410,000 Lower-of-cost-or-market at 12/31/11 ....................... (390,000 ) Allowance amount needed to reduce inventory to market (b) ........................................................... $ 20,000 Recovery of previously recognized loss = (a) – (b) = $24,000 – $20,000 = $4,000. (c) Both methods of recording lower-of-cost-or-market adjustments have the same effect on net income. EXERCISE 9-8 (12–17 minutes) Cost per Chair $54 48 30 Cost Allocated to Chairs $21,600 14,400 24,000 $60,000 Total Cost $60,000 60,000 60,000 Gross Profit $ 7,200 3,200 2,400 $12,800 X X X Relative Sales Price $36,000/$100,000 $24,000/$100,000 $40,000/$100,000 Sales $18,000 8,000 6,000 $32,000 Total Sales Price $36,000 24,000 40,000 $100,000 Cost of Chairs Sold $10,800 4,800 3,600 $19,200 Sales Price per Chain $90 80 50 Cost per Chair $54 48 30 Inventory of straight chairs (800 – 120) X $30 = $20,400 No. of Chairs 400 300 800 Number of Chairs Sold 200 100 120 Chairs Lounge chairs Armchairs Straight chairs Chairs Lounge chairs Armchairs Straight chairs EXERCISE 9-12 (10–15 minutes) (a) Inventory, May 1 (at cost) ................................... $160,000 Purchases (at cost) ............................................ 640,000 Purchase discounts ........................................... (12,000) Freight-in ............................................................. 30,000 Goods available (at cost) .......................... 818,000 Sales (at selling price) ........................................ $1,000,000...
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Review Ch 9 ACCT 373 - EXERCISE 9-4(10–15 minutes(a Cost...

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