Chapter 08 - Homework Solutions

Chapter 08 - Homework Solutions - 8-1CHAPTER 8 Valuation of...

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Unformatted text preview: 8-1CHAPTER 8 Valuation of Inventories: A Cost-Basis Approach SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 8-3 December 31 inventory per physical count $200,000Goods-in-transit purchased FOB shipping point 15,000Goods-in-transit sold FOB destination 22,000December 31 inventory $237,000BRIEF EXERCISE 8-5 $11,850Weighted average cost per unit 1,000 =$11.85Ending inventory 300 X $11.85 = $3,555Cost of goods available for sale $11,850Deduct ending inventory 3,555Cost of goods sold (700 X $11.85) $ 8,295BRIEF EXERCISE 8-6 Ending inventory (April 23) 300 X $13 = $3,900Cost of goods available for sale $11,850Deduct ending inventory 3,900Cost of goods sold $ 7,9508-2BRIEF EXERCISE 8-7 April 1 250 X $10 =$2,500April 15 50 X $12 = 600Ending inventory $3,100Cost of goods available for sale $11,850Deduct ending inventory 3,100Cost of goods sold $ 8,7508-3SOLUTIONS TO EXERCISES EXERCISE 8-1 (1520 minutes) Items 1, 3, 5, 8, 11, 13, 14, 16, and 17 would be reported as inventory in the financial statements. The following items would not be reported as inventory: 2. Cost of goods sold in the income statement. 4. Not reported in the financial statements. 6. Cost of goods sold in the income statement. 7. Cost of goods sold in the income statement. 9. Interest expense in the income statement. 10. Advertising expense in the income statement. 12. Office supplies in the current assets section of the balance sheet. 15. Not reported in the financial statements. 18. Short-term investments in the current asset section of the balance sheet. EXERCISE 8-3 (1015 minutes) 1. Include. Merchandise passes to customer only when it is shipped. 2. Do not include. Title did not pass until January 3. 3. Include in inventory. Product belonged to Harlowe Inc. at December 31, 2007. 4. Include in inventory. Under invoice terms, title passed when goods were shipped. 5. Do not include. Goods received on consignment remain the property of the consignor. 8-4EXERCISE 8-9 (1525 minutes) (a) Jan. 4 Accounts Receivable........................640 Sales (80 X $8)..........................640Jan. 11 Purchases ($150 X $6)......................900 Accounts Payable....................900Jan. 13 Accounts Receivable........................1,050 Sales (120 X $8.75)...................1,050Jan. 20 Purchases (160 X $7)........................1,120 Accounts Payable....................1,120Jan. 27 Accounts Receivable........................900 Sales (100 X $9)........................900Jan. 31 Inventory ($7 X 110)..........................770 Cost of Goods Sold ..........................1,750*Purchases ($900 + $1,120)......2,020Inventory (100 X $5).................500*($500 + $2,020 $770) 8-5EXERCISE 8-9 (Continued) (b) Sales ($640 + $1,050 + $900) $2,590 Cost of goods sold 1,750Gross profit $ 840(c) Jan. 4 Accounts Receivable...........................640 Sales (80 X $8).............................640Cost of Goods Sold .............................400 Inventory (80 X $5)......................400Jan. 11 Jan....
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Chapter 08 - Homework Solutions - 8-1CHAPTER 8 Valuation of...

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