Libby Solutions Ch 7

Libby Solutions Ch 7 - E71 Item Ending inventory(physical...

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E7–1 Item Amount Explanation Ending inventory (physical count on December 31, 2011) $34,500 Per physical inventory. a. Goods purchased and in transit + 700 Goods purchased and in transit, F.O.B. shipping point, are owned by the purchaser. b. Samples out on trial to customer + 1,800 Samples held by a customer on trial are still owned by the vendor; no sale or transfer of ownership has occurred. c. Goods in transit to customer Goods shipped to customers, F.O.B. shipping point, are owned by the customer because ownership passed when they were delivered to the transportation company. The inventory correctly excluded these items. d. Goods sold and in transit + 1,500 Goods sold and in transit, F.O.B. destination, are owned by the seller until they reach destination. Correct inventory, December 31, 2011 $38,500 E7–2. (Italics for missing amounts only.) Case A Case B Case C Net sales revenue. .......... $7,500 $ 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 ................... 1,500 1,500 1,500 Expenses ................... 400 1,900 700
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Pretax income. ................ $ 1,100 $ (400 ) $ 800
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E7–3. (Italics for missing amounts only.) Case Sales Revenue Beg. Inven- tory Pur- chases Total Avail- able Ending Inventory Cost of Goods Sold Gross Profit Ex- penses Pretax Income or (Loss) A $ 650 $100 $700 $800 $500 $300 $350 $200 $150 B 1,100 200 900 1,100 300 800 300 150 150 C 600 150 350 500 300 200 400 100 300 D 800 150 550 700 300 400 400 200 200 E 1,000 200 900 1,100 600 500 500 550 (50) E7-5 Average Units FIFO LIFO Cost Cost of goods sold: Beginning inventory ($5). ............ 2,000 10,000 10,000 10,000 Purchases (March 21) ($7). ........ 5,000 35,000 35,000 35,000 (August 1) ($8). ......... 3,000 24,000 24,000 24,000 Goods available for sale. .. 10,000 69,000 69,000 69,000 Ending inventory*. ....................... 4,000 31,000 24,000 27,600 Cost of goods sold. ........... 6,000 38,000 45,000 41,400 *Ending inventory computations: FIFO: (3,000 units @ $8) + (1,000 units @ $7) = $31,000. LIFO: (2,000 units @ $5) + (2,000 units @ $7) = $24,000. Average: [(2,000 units @ $5) + (5,000 units @ $7) + (3,000 units @ $8)] = $69,000 ÷ 10,000 units = $6.90 per unit. 4,000 units @ $6.90 = $27,600.
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E7–10. Req. 1 Average FIFO LIFO Cost Cost of goods sold: Beginning inventory (400 units @ $28). .. $11,200 $11,200 $11,200 Purchases (475 units @ $36). ................. 17,100 17,100 17,100 Goods available for sale. ......................... 28,300 28,300 28,300 Ending inventory (545 units)*. ................. 19,060 16,420 17,625 Cost of goods sold (330 units). ................ $ 9,240 $11,880 $ 10,675 *Computation of ending inventory: FIFO : (475 units x $36) + (70 units x $28) = $19,060 LIFO : (400 units x $28) + (145 units x $36) = $16,420 Weighted Average:
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This note was uploaded on 03/20/2012 for the course ACCT 225 taught by Professor Canace during the Spring '08 term at South Carolina.

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Libby Solutions Ch 7 - E71 Item Ending inventory(physical...

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