Dover's management is afraid that an error was made when calculating COGS. Most of the calculations have already been checked by the auditors, but management still thinks that one inventory item has not been correctly recorded. They would like you to go back through the inventory calculations for that item to correct any possible mistakes. Currently they show that 7,80o units of item TC178, purchased for $8 each, were on hand at the beginning of the year, that $665,000 worth of TC178 was purchased during the year, that discounts of $3,200 were earned by making early payments on these purchases, and that $5,10o worth of returns were made during the year. The records show that only 7,000 units of the beginning TC178 inventory remained at the end of the year. Dover uses the perpetual LIFO system for calculating inventory. Their inventory transactions for item TC178 for the period are as follows: (NOTE that the vendor provides free shipping on all units of TC178) • At the beginning of the period, 7,800 units of TC178, purchased for $8.00 each, were on hand. • On Jan 15, an additional 23,000 units were purchased for $9.00 each. • On February 28, 21,000 units were sold. • On March 14, an additional 12,000 units were purchased for $11.00 each. • On March 20, a 2.0% cash discount was earned by paying for the March 14 purchase early. • On March 30, 13,600 units were sold. On July 30, 4,300 units were sold. • On August 20, an additional 21,00o0 units were purchased for $14.00 each. • On September 2, 9,000 units were sold. • On December 1, 8,400 units were sold.
Intermediate 1 FSR Project Part #1: Inventory Basics Picture has all the info needed to create a journal
So, here is what I need help with, I don't understand how he came up with answers regarding "On March 30, 13,600 units were sold" and On July 30, 4,300 units were sold." If you look at the Adjusting Journal Entries Picture I highlight blue next to the numbers I don't understand how they came about and the price unit as well. Specially Jul-30 the 400 and 3,900 and their price units?
What I struggle with is that I dont know what calculation method used to come up with 1,600, 400, 3900? How did he come ups with these numbers? Show me the calculation method used to come up with these numbers 1,600, 400, 3900 and their price unit as well? I am stuck there.
Thank You
![Intermediate 1 FSR Project Part #1: Inventory Basics
Goal:
To practice correcting the financial statements for an inventory calculation error. (See Topic Guides A
13, 14, 37, 38).
Information:
Dover's management is afraid that an error was made when calculating COGS. Most of the calculations
have already been checked by the auditors, but management still thinks that one inventory item has
not been correctly recorded. They would like you to go back through the inventory calculations for that
item to correct any possible mistakes. Currently they show that 7,800 units of item TC178, purchased
for $8 each, were on hand at the beginning of the year, that $665,000 worth of TC178 was purchased
during the year, that discounts of $3,200 were earned by making early payments on these purchases,
and that $5,10o worth of returns were made during the year. The records show that only 7,000 units of
the beginning TC178 inventory remained at the end of the year.
Dover uses the perpetual LIFO system for calculating inventory. Their inventory transactions for item
TC178 for the period are as follows: (NOTE that the vendor provides free shipping on all units of
TC178)
At the beginning of the period, 7,800 units of TC178, purchased for $8.00 each, were on
hand.
• On Jan 15, an additional 23,000 units were purchased for $9.0o each.
• On February 28, 21,000 units were sold.
• On March 14, an additional 12,000 units were purchased for $11.00 each.
• On March 20, a 2.0% cash discount was earned by paying for the March 14 purchase early.
• On March 30, 13,600 units were sold.
• On July 30, 4,300 units were sold.
• On August 20, an additional 21,000 units were purchased for $14.00 each.
On September 2, 9,000 units were sold.
• On December 1, 8,400 units were sold.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa7d24826-e009-4840-b4a8-9e46b7887ea6%2Fffaa0213-6417-4b17-bf91-860e31ccbd63%2F9e3d78_processed.png&w=3840&q=75)
![Adjusting Journal Entries
Original Information (from instructions):
Beginning Balance
Purchases
Updated Information (From Table):
$62,400 Beginning Balance
Purchases
$62,400
$665,000
$3,200
$5,100
$633,000
$2,640
$0
Pur Discount
Pur Discount
Pur Returns
Pur Returns
$656,700 Net Purchases
$719,100 COGAS
$56,000 Ending Inventory
$663,100 COGS
Net Purchases
$630,360
$692,760
$81,600
$611,160
COGAS
Ending Inv
COGS
7,000 @
$8
Correct Information:
Inventory Table: Perpetual
Date
Purchases
Cost of Goods Sold
Inv Balance
BB
7,800 @ $8
23,000 @ $9 $ 207,000
24
62,400
$ 269,400
15-Jan
28-Feb
21,000 @
$9 $ 189,000$
12,000 @ $11 $ 132,000
Discount @ 2% $(2,640)
80,400
$ 212,400
$ 209,760
80,400
14-Mar
20-Mar
30-Mar
12,000@ $10.78 $ 129,360S
$9 $
$9 $
$8 $
1,600 @
400 @
3,900 @
66,000
62,400
31,200
$ 325,200
$14 $ 126,000 $ 199,200
14,400 $
3,600 $
31,200 $
30-Jul
21,000 @ $14 $ 294,000
20-Aug
2-Sep
9,000 @
8,400 @
$14 $ 117,600 S
$ 611,160 $
1-Dec
81,600
81,600
$ 633,000
$
2$
Totals
Purch
Returns
$ 611,160
(2,640)
$
Discounts
COGS
Allowances
Correcting Entries Needed:
Inventory
A/P
$25,600
$26,340
COGS
$51,940
To record the inventory correction for item TC178.
Income Tax Expense
Income Tax Payable
To record change in taxes due to increase (decrease) in NI caused by the change in COGS
$15,582
$15,582
30% * $51,940 = $15,582 decrease in income taxe expense
%3D](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa7d24826-e009-4840-b4a8-9e46b7887ea6%2Fffaa0213-6417-4b17-bf91-860e31ccbd63%2Ft3247qp_processed.jpeg&w=3840&q=75)
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