Assignment 202 20Dr
Accounting II
Assignment 2 Dr. Medhat El Guindy
FMI
Copy 2015
Adapted by
Dr. Heba Wahba
CPA — CIA — CMA
01114364363
1
Dr. Heba Wahba
EXERCISE 6-8
(a)
Cost of Goods
Available for Sale
$5,500
÷
Total Units
Available for Sale
900
Ending inventory (100 X $6.11)
Cost of goods sold (800 X $6.11)
Weighted Average
Unit Cost
$6.11
=
$ 611
4,889
(b) Ending inventory is lower than FIFO ($700) and higher than LIFO ($500).
In contrast, cost of goods sold is higher than FIFO ($4,800) and lower than LIFO ($5,000).
(c) The average-cost method uses a weighted-average unit cost, not a simple average of unit costs.
EXERCISE 6-9
Cost
Cameras
Minolta
Canon
Total
Light meters
Vivitar
Kodak
Total
Total inventory
$
Market
850
900
1,750
1,500
1,680
3,180
$4,930
$
780
912
1,692
1,380
1,890
3,270
$4,962
Lower
-of-Cost
-or-Market:
$
780
900
1,380
1,680
$4,740
EXERCISE 6-14
(a)
Inventory Turnover
Days in Inventory
(b)
Alpha Company
Omega Company
$190,000
($45,000 + $55,000)/2
= 3.80
$292,000
($71,000 +
$69,000)/2
= 4.17
365/3.80 = 96 days
365/4.17 = 88 days
Omega Company is moving its inventory more quickly, since its inventory turnover is higher, and its days in inventory is lower.
2
Dr. Heba Wahba
EXERCISE 6-16
(a)
The cost of goods available for sale is:
June 1 Inventory
June 12 Purchase
June 23 Purchase
Total cost of goods available
200 @ $5
400 @ $6
300 @ $7 for sale
$1,000
2,400
2,100
$5,500
FIFO
Date
June 1
June 12
Purchases
(400 @ $6)
$2,400
June 15
June 23
Cost of Goods Sold
(200 @ $5)
(240 @ $6)
$1,000
1,440
(160 @ $6)
(200 @ $7)
960
1,400
$4,800
(300 @ $7) $2,100
June 27
Balance
(200 @ $5)
$1,000
(200 @ $5)
} $3,400
(400 @ $6)
(160 @ $6)
$ 960
(160 @ $6)
$3,060
(300 @ $7) }
(100 @ $7)
$
700
Ending inventory: $700. Cost of goods sold: $5,500 — $700 = $4,800.
LIFO
Date
June 1
June 12
Purchases
(400 @ $6)
$2,400
June 15
June 23
June 27
Cost of Goods Sold
(400 @ $6)
(40 @ $5)
$2,400
$ 200
(300 @ $7)
60 @ $5
$2,100
300
Assignment 2 Dr. Medhat El Guindy
FMI
Copy 2015
Adapted by
Dr. Heba Wahba
CPA — CIA — CMA
01114364363
1
Dr. Heba Wahba
EXERCISE 6-8
(a)
Cost of Goods
Available for Sale
$5,500
÷
Total Units
Available for Sale
900
Ending inventory (100 X $6.11)
Cost of goods sold (800 X $6.11)
Weighted Average
Unit Cost
$6.11
=
$ 611
4,889
(b) Ending inventory is lower than FIFO ($700) and higher than LIFO ($500).
In contrast, cost of goods sold is higher than FIFO ($4,800) and lower than LIFO ($5,000).
(c) The average-cost method uses a weighted-average unit cost, not a simple average of unit costs.
EXERCISE 6-9
Cost
Cameras
Minolta
Canon
Total
Light meters
Vivitar
Kodak
Total
Total inventory
$
Market
850
900
1,750
1,500
1,680
3,180
$4,930
$
780
912
1,692
1,380
1,890
3,270
$4,962
Lower
-of-Cost
-or-Market:
$
780
900
1,380
1,680
$4,740
EXERCISE 6-14
(a)
Inventory Turnover
Days in Inventory
(b)
Alpha Company
Omega Company
$190,000
($45,000 + $55,000)/2
= 3.80
$292,000
($71,000 +
$69,000)/2
= 4.17
365/3.80 = 96 days
365/4.17 = 88 days
Omega Company is moving its inventory more quickly, since its inventory turnover is higher, and its days in inventory is lower.
2
Dr. Heba Wahba
EXERCISE 6-16
(a)
The cost of goods available for sale is:
June 1 Inventory
June 12 Purchase
June 23 Purchase
Total cost of goods available
200 @ $5
400 @ $6
300 @ $7 for sale
$1,000
2,400
2,100
$5,500
FIFO
Date
June 1
June 12
Purchases
(400 @ $6)
$2,400
June 15
June 23
Cost of Goods Sold
(200 @ $5)
(240 @ $6)
$1,000
1,440
(160 @ $6)
(200 @ $7)
960
1,400
$4,800
(300 @ $7) $2,100
June 27
Balance
(200 @ $5)
$1,000
(200 @ $5)
} $3,400
(400 @ $6)
(160 @ $6)
$ 960
(160 @ $6)
$3,060
(300 @ $7) }
(100 @ $7)
$
700
Ending inventory: $700. Cost of goods sold: $5,500 — $700 = $4,800.
LIFO
Date
June 1
June 12
Purchases
(400 @ $6)
$2,400
June 15
June 23
June 27
Cost of Goods Sold
(400 @ $6)
(40 @ $5)
$2,400
$ 200
(300 @ $7)
60 @ $5
$2,100
300