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Chapter 5, 6 Exercises

This document contains 10 practice problems related to inventory accounting using different inventory costing methods like FIFO, LIFO, and weighted average. The problems involve calculating cost of goods sold, ending inventory balances, journal entries for purchases and sales transactions under different scenarios. Step-by-step solutions are provided for each problem showing the calculations and journal entries.

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522 views

Chapter 5, 6 Exercises

This document contains 10 practice problems related to inventory accounting using different inventory costing methods like FIFO, LIFO, and weighted average. The problems involve calculating cost of goods sold, ending inventory balances, journal entries for purchases and sales transactions under different scenarios. Step-by-step solutions are provided for each problem showing the calculations and journal entries.

Uploaded by

Đức Tiến
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Chapter 5 & 6 exercises

1.  A company sells a climbing kit and uses the perpetual inventory system to account for its
merchandise. The beginning balance of the inventory and its transactions during January were as
follows:

   
Calculate the cost of ending inventory using inventory method: 
a.  LIFO method.
b. FIFO method.
c.  Weighted-average method.

2. A Company uses a weighted-average perpetual inventory system.


August 2, 10 units were purchased at $12 per unit.
August 18, 15 units were purchased at $15 per unit.
August 29, 20 units were sold.
August 31, 14 units were purchased at $16 per unit.
What is the per-unit value of ending inventory on August 31?

3. Given the following information, determine the cost of the inventory at June 30 using the LIFO
perpetual inventory method.

   
What is the cost of the ending inventory? 

4. At the end of January, 2013, the company had $3000 inventories in their store, some inventories
worth $500 was totally damaged. During January the company sign a contract to import $10,000
inventories with FOB destination point. The exporter shipped these inventories on 10 Jan, and it is
estimated that these would arrive on 5 Feb. The company also consigned $5000 inventories at B
store.

Calculate ending inventories of the company as at 31 Jan.

5. A company has inventory of 15 units at a cost of $12 each on August 1. On August 5, it purchased
10 units at $13 per unit. On August 12 it purchased 20 units at $14 per unit. On August 15, it sold 30
units for $20 each. Using the FIFO perpetual inventory method, what is the COGS? what is the value
of the inventory at August 15 after the sale (Ending inventories)?
 6. A company had inventory of 10 units at a cost of $20 each on November 1. On November 2, it
purchased 10 units at $22 each. On November 6 it purchased 6 units at $25 each. On November 8, it
sold 22 units for $54 each. Using the LIFO perpetual inventory method, what was the cost of the 22
units sold? 

7.  (Optional) A company uses the periodic inventory system and had the following activity during
the current monthly period.

   

In a periodic inventory system, using the weighted-average inventory method, what is the ending
inventory?

8. ME company sold 200 units of its goods for $5 each. The COGS is $3 each. Prepare journal entries
for the transactions.

i) 10 days later, customer returned 50 units of goods

ii) 10 days later, customer wanted to return 50 defective units of goods, the company agreed to
reduce price to $3, so that the customer accepted the goods and not returned.
9. A company made the following merchandise purchases and sales during the month of May:

   

There was no beginning inventory. If the company uses the weighted average inventory valuation
method and the perpetual inventory system, what would be the cost of its ending inventory? 

10. Prepare journal entries for transactions.

a) Purchase 20 sets of TV Sony, $200/set, paid in cash

b) Sell on credit 10 sets of TV for company A at the selling price of $300/set.

c) Sell 3 sets of TV at price of $350/set to B Company, already received cash.

d) Company A returned 1 defective TV.

e) Reduce price of 1 TV for B Company by $100.

f) Sell on credit 4 cars with price per car is $ 40,000, total costs to import and put in sale these cars
are $20,000 per car.
Solutions

1.

a) LIFO

Ending inventories are $276

b) FIFO

Purchases Sales Balance


Date Units Unit Total Units Unit Total Units Unit Total
cost cost ($) cost ($) ($)
Jan 1 18 13 234
Jan 12 30 $14 $240 18 13 234
30 14 420
Jan 19 18 13 234
6 14 84 24 14 336
Jan 20 24 $ 17 $408 24 14 336
24 17 408
Jan 27 24 14 336 21 17 357
3 17 51

c) Weighted –average method

Purchases Sales Balance


Date Units Unit Total Units Unit Total Units Unit Total
cost cost ($) cost ($) ($)
Jan 1 18 13 234
Jan 12 30 $14 $240 48 13.625 654

Jan 19 24 13,625 327 24 13.625 327

Jan 20 24 $ 17 $408 48 15.3125 735


Jan 27 27 15.3125 413.4375 21 15.3125 321.5625

2.

Per unit value of ending inventories is $15.42

3.

The cost of the ending inventory is $380

4. Remaining 18 units, FIFO  18 units @$12/unit

COGS = 10 x $10 + 20 x $12 – 18 x$12 = $124

5. Units available for sale = 15 + 10 + 20 = 45 units


Units in inventory = 45 - 30 = 15 units
Cost of inventory = 15 x $14 each = $210

6. (10 x $20) + (10 x $22) + (2 x $25) = $470

7.
Weighted average cost per unit: $6,600/300 units = $22
Ending inventory: (300 units - 200 units) x $22 = $2,200

8. DR Cash 1000
CR Revenue 1000

DR COGS 600

CR Goods 600

i) Dr sales return and allowance 250

Cr cash 250

Dr inventories 150

Cr COGS 150

ii) Dr sales return and allowance100 (=50 * $2)

Cr cash 100

9.
10. a) Dr inventories 4000

Cr Cash 4000

b. Dr Accounts receivable 3000

Cr Revenue 3000

Dr COGS 2000

Cr inventories 2000

c. Dr Cash 1050

Cr Revenue 1050

Dr COGS 600

Cr inventories 600

d. Dr Accounts receivable 160000

Cr Revenue 160000

Dr COGS 80000

Cr inventories 80000

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