Chapter 6 homework fall 2021 v2

Chapter 6 – Homework Assignment Fall 2021 V2
Problem One: During the year, Masks R Us Corporation has the following inventory transactions.
Date
Transaction
Number of Units Unit Cost Total Cost
Jan. 1 Beginning inventory
50
$42
$ 2,100
Apr. 7 Purchase
130
44
5,720
Jul. 16Purchase
200
47
9,400
Oct. 6 Purchase
110
48
5,280
490
$22,500
For the entire year, the company sells 440 units of inventory for $60 each.
Required:
1. Using FIFO, calculate (a) ending inventory, (b) cost of goods sold, (c) sales revenue, and (d) gross profit.
a) Ending Inventory
$2,400
b) CGS
$20,100
c) Sales Revenue
$26,400
d) Gross Profit
$6,300
2. Using LIFO, calculate (a) ending inventory, (b) cost of goods sold, (c) sales revenue, and (d) gross profit.
a) Ending Inventory
$2,200
b) CGS
$20,300
c) Sales Revenue
$26,400
d) Gross Profit
$6,100
3. Using weighted-average cost, calculate (a) ending inventory, (b) cost of goods sold, (c) sales revenue, and
(d) gross profit.
a) Ending Inventory
$9,200
b) CGS
$14,260
c) Sales Revenue
$26,400
d) Gross Profit
$12,140
4. Determine which method will result in higher profitability when inventory costs are rising.
FIFO will result in a higher profitability.
1
Problem Two: JC Bikes has the following transactions during May.
1.
Analyze and record the transactions of JC Bikes, assuming the company uses a perpetual inventory
system.
May 2
A
3300
May 3
A
NA
May 5
A
400
May 10
Purchases bikes on account from Bikers R Us Wholesale for $3,300, terms 1/10,
n/30.
L
NA
SE
NA
R
NA
E
3300
NI
NA
CF
-IA
L
200
SE
NA
R
NA
E
200
NI
NA
CF
-IA
L
NA
SE
NA
R
NA
E
400
NI
Account
Freight
cash
NA
CF
Account
-IA
Accounts
payable
Purchase returns
3300
3300
DR
CR
200
200
DR
CR
400
400
Pays the full amount due to BRU.
SE
R
E
NI
CF
2900
NA
NA
NA
2900
NA
-OA
3300
CR
Returns bikes with a cost of $400 to BRU because part of the order is incorrect.
L
A
purchases
Accounts
payable
DR
Pays cash for freight costs of $200 on bikes purchased from BRU.
A
May 30
Account
Account
Accounts
payable
Purchase
discounts
Cash
DR
CR
2900
29
2160
Sells all Bikes purchased on May 2 (less those returned on May 5) for $4,000 on
account.
L
NA
SE
NA
R
3300
E
NA
NI
CF
NA
+IA
2
Account
Costs of goods
sold
Purchase returns
Purchase
discounts
Purchases
DR
CR
3300
400
29
200
2. Assume that payment to BRU is made on May 24 instead of May 10. Record this
payment.
A
3300
L
NA
SE
NA
R
NA
E
3300
NI
NA
CF
-IA
Account
Cash
Sale
DR
CR
3300
3300
Problem Three:
You are given the following information related to XYZ Corporation for the year (listed in no particular order):
•
•
•
•
•
•
•
•
Net Credit Sales
Ending Accounts Receivable
Average Accounts Receivable
Ending Inventory
Average Inventory
Cost of Goods Sold
Bad Debt Expense
Allowance for Uncollectible Accounts
$900,000
$300,000
$250,000
$150,000
$125,000
$600,000
$40,000
$30,000
A) What was Gross Profit for the year?
Gross Profit= 300000
B) What was the Gross Profit ratio for the year?
Gross profit ratio=33%
C) What was the Inventory Turnover ratio for the year?
Inventory Turnover ratio=4.8
D) If the Inventory Turnover ratio was twice as much this year as it was last year, how would you interpret that?
The corporation is able to sell it’s inventory more quickly.
3
Name:
Description:
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