Instructor Mark Stricklett
ACC 205
Week Three Exercise Assignment
Inventory
1. Specific identification method. Boston Galleries uses the specific identification method for inventory valuation. Inventory information for several oil paintings follows. Painting Cost
1/2 Beginning inventory
Woods
$21,000
4/19 Purchase
Sunset
21,800
6/7 Purchase
Earth
31,200
12/16 Purchase
Moon
4,000
Woods and Moon were sold during the year for a total of $35,000. Determine the firm’s
a. cost of goods sold:
b. beginning inventory woods: $21,000
c. Purchase moon: + $4,000
d. Cost of goods sold = $25,000
e. gross profit:
f. Total for year: $35,000
g. Cost of goods sold: - $25,000
h. Total gross profit = $10,000
i. ending inventory:
j. Purchase Sunset: $21,800
k. Purchase Earth: + $31,200
l. Ending inventory = $53,000
2. Inventory valuation methods: basic computations. The January beginning inventory of the White Company consisted of 300 units costing $40 each. During the first quarter, the company purchased two batches of goods: 700 Units at $44 on February 21 and 800 units at $50 on March 28. Sales during the first quarter were 1,400 units at $75 per unit. The White Company uses a periodic inventory system. Using the White Company data, fill in the following chart to compare the results obtained under the +
Made a chart however here is the work for my answers:
Beginning inventory 300 at $40 each= 300x40= $12,000
Feb 21 purchase 700 at $44 each= 700x44= $30,800
Mar 28 purchase 800 at $50 each= 800x50= $40,000
Total 1,800 units Total available for sale: $82,800
Sold 1,400 units (Subtract units sold form total units)
400 units left.
FIFO (first in first out) 400 x $50= $20,000
LIFO (last in first out) 400 total 300 at $40 + 100 at $44= $16,400
For cost of goods: subtract FIFO goods avail with FIFO ending inventory
$82,800 - $20,000 = $62,800
Subtract LIFO goods avail with LIFO ending inventory
$82,800 - $16,400 = $ 66,400
Average the answers by adding FIFO to LIFO and dividing by 2 answers below:
3. Perpetual inventory system: journal entries. At the beginning of 20X3, Beehler Company implemented a computerized perpetual inventory system. The first transactions that occurred during 20X3 follow:
1/2/20X3 Purchases on account: 500 units @ $6 = $3,000. FIFO: Dr Merchandise Inventory $3,000 Cr Accounts Payable $3,000. LIFO: Dr Merchandise Inventory $3,000 Cr Accounts Payable $3,000.
1/15/20X3 Sales on account: 300 units @ $8.50 = $2,550. FIFO: Dr Accounts Receivable $2,550 Cr Sales $2,550. LIFO: Dr Accounts Receivable $2,550 Cr Sales $2,550.
300 units at $6. FIFO: Dr cost of goods sold $1,800 Cr Merchandise Inventory $1,800. LIFO: Dr Cost of goods sold $1,800 Cr Merchandise Inventory $1,800.
1/20/20X3 Purchases on Account: 200 units @ 5 = $1,000. FIFO: Dr Merchandise Inventory $1,000 Cr Accounts Payable $1,000. LIFO: Dr Merchandise Inventory $1,000 Cr Accounts Payable $1,000.
1/25/20X3 Sales on Account: 300 units @ $8.50 = $2,550. FIFO: Dr Accounts Receivable $2,550 Cr Sales $2,550. LIFO: Dr Accounts Receivable 2,550 Cr Sales 2,550.
200 units at $6 plus 100 units at $5 = $1,700. FIFO: Dr Cost of goods sold $1,700 Cr Merchandise $1,700.
200 units at $5 plus 100 units at $6= $1,600. LIFO: Dr Cost of goods sold $1,600 Cr Merchandise Inventory $1,600.
The company president examined the computer-generated journal entries for these transactions and was confused by the absence of a Purchases account.
a. Duplicate the journal entries that would have appeared on the computer printout under FIFO & LIFO
Beehler Company
JOURNAL (FIFO Method)
Date
