3101 Homework Solutions ch3.08

# 3101 Homework Solutions ch3.08 - Acct 3101 Intermed Acctg 1...

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Acct 3101 Intermed. Acctg 1 Homework Solutions Text: Kieso et al. 13 th ed. Chapter 8 EXERCISE 8-16 (a) 1. 2,100 units available for sale – 1,400 units sold = 700 units in the ending inventory. 500 @ \$4.58 = \$2,290 200 @ 4.60 = 920 700 \$3,210 Ending inventory at FIFO cost. 2. 100 @ \$4.10 = \$ 410 600 @ 4.30 = 2,580 700 \$2,990 Ending inventory at LIFO cost. 3. \$9,324 cost of goods available for sale ÷ 2,100 units available for sale = \$4.44 weighted-average unit cost. 700 units X \$4.44 = \$3,108 Ending inventory at weighted-average cost. (b) 1. LIFO will yield the lowest gross profit because this method will yield the highest cost of goods sold figure in the situation presented. The company has experienced rising purchase prices for its inventory acquisitions. In a period of rising prices, LIFO will yield the highest cost of goods sold because the most recent purchase prices (which are the higher prices in this case) are used to price cost of goods sold while the older (and lower) purchase prices are used to cost the ending inventory. 2. LIFO will yield the lowest ending inventory because LIFO uses the oldest costs to price the ending inventory units. The company has experienced rising purchase prices. The oldest costs in this case are the lower costs. File: 3101 homework solutions ch.08 Page 1

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EXERCISE 8-17 (a) 1. 400 @ \$30 = \$12,000 110 @ \$25 = 2,750 \$14,750 2. 400 @ \$20 = \$ 8,000 110 @ \$25 = 2,750 \$10,750 (b) 1. FIFO \$14,750 [same as (a)] 2. LIFO 100 @ \$20 = \$ 2,000 10 @ \$25 = 250 400 @ \$30 = 12,000 \$14,250 File: 3101 homework solutions ch.08 Page 3

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EXERCISE 8-25 Current \$ Price Index Base Year \$ Change from Prior Year 2007 \$ 80,000 1.00 \$ 80,000 2008 111,300 1.05 106,000 +\$26,000 2009 108,000 1.20 90,000 (16,000) 2010 122,200 1.30 94,000 +4,000 2011 147,000 1.40 105,000 +11,000 2012 176,900 1.45 122,000 +17,000 Ending Inventory—Dollar-value LIFO: 2007 \$80,000 2011 \$80,000 @ 1.00 = \$ 80,000 10,000 @ 1.05 = 10,500 2008 \$80,000 @ 1.00 = \$ 80,000 4,000 @ 1.30 = 5,200 26,000 @ 1.05 = 27,300 11,000 @ 1.40 = 15,400 \$107,300 \$111,100 2009 \$80,000 @ 1.00 = \$ 80,000 2012 \$80,000 @ 1.00 =
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## This note was uploaded on 04/29/2011 for the course ACCT 3001 taught by Professor Erickson during the Spring '10 term at University of Minnesota Duluth.

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3101 Homework Solutions ch3.08 - Acct 3101 Intermed Acctg 1...

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