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ProblemSet5

# ProblemSet5 - Chapter 6 Inventory and Cost of Goods...

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Chapter 6 Inventory and Cost of Goods Sold (15-25 min.) E 6-14 Journal DATE ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT 1 Inventory (\$1,870 + \$900)…………….. 2,770 Accounts Payable…………………... 2,770 2 Accounts Receivable (13 @ \$500)….. 6,500 Sales Revenue………………………. 6,500 Cost of Goods Sold……………………. 2,160* Inventory……………………………… 2,160 3 Sales revenue…………………………... \$6,500 Cost of goods sold…………………….. 2,160 Gross profit……………………………... \$4,340 Ending inventory (\$800 + \$1,870 + \$900 \$2,160) …... \$1,410** _____ *(5 @ \$160) + (8 @ \$170) = \$2,160 **Or, (5 @ \$180) + (3 @ \$170) = \$1,410

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(10-15 min.) E 6-15 1. Inventory Begin. Bal. ( 5 units @ \$160) 800 Purchases Oct. 15 (11 units @ \$170) 1,870 Cost of goods sold 26 ( 5 units @ \$180) 900 (13 units @ \$?) ? Ending bal. ( 8 units @ \$?) ? Cost of Goods Sold Ending Inventory (a) Specific unit cost (2 @ \$160) + (11 @ \$170) = \$2,190 (3 @ \$160) + (5 @ \$180) = \$1,380 (b) Average cost 13 × \$170* = \$2,210 8 × \$170* = \$1,360 _____ *Average cost per unit = (\$800 + \$1,870 + \$900) = \$170 (5 + 11 + 5) (c) FIFO (5 @ \$160) + (8 @ \$170) = \$2,160 (5 @ \$180) + (3 @ \$170) = \$1,410 (d) LIFO (5 @ \$180) + (8 @ \$170) = \$2,260 (5 @ \$160) + (3 @ \$170) = \$1,310 2. LIFO produces the highest cost of goods sold, \$2,260.
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