Homework Session 12 Spring 2010 - CH ANGED Homework Session...

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CHANGED Homework Session 12 Spring 2010 ANSWERS TO MULTIPLE CHOICE 1. a) 2. d) 3. a) 4. b) 5. c) 6. c) 7. a) 8. c) 9. c) 10. a) M 7–2. To record the purchase of 90 new shirts in accordance with the cost principle (perpetual inventory system): Inventory (+A). ............................................................... 2,500 Cash ( - A). ........................................................... 2,500 Cost: $2,180 + $175 + $145 = $2,500. The $120 interest expense is not a proper cost of the merchandise; it is recorded as prepaid interest expense and later as interest expense. M7–4. Computation : Simply rearrange the basic inventory model (BI + P – EI = COGS): Cost of goods sold . ................................................. $10,969 million + Ending inventory . ................................................ 3,062 million – Beginning inventory . ............................................... (2,969 ) million Purchases . .............................................................. $11,062 million
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E7–2. (Italics for missing amounts only.) Case A. ......... Case BCase C Net sales revenue. .......... $8,000 $ 5,500 $6,000 Beginning inventory. ....... $11,200 $ 6,500 $ 4,000 Purchases ................... 5,000 8,550 9,500 Goods available for sale. 16,200 15,050 13,500 Ending inventory. ............ 10,200 11,050 9,000 Cost of goods sold. ......... 6,000 4,000 4,500 Gross profit ................... 2,000 1,500 1,500 Expenses ................... 400 1,800 700 Pretax income. ................ $ 1,600 $ (300 ) $ 800
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E7–8. Req. 1 SCORESBY, INC. Income Statement For the Year Ended December 31, 2012 Case A Case B FIFO LIFO Sales revenue 1 ............................... .$696,000 $696,000 Cost of goods sold: Beginning inventory $ 35,000 $ 35,000
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Homework Session 12 Spring 2010 - CH ANGED Homework Session...

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