Financial Accounting (12th Edition) (What's New in Accounting)
12th Edition
ISBN: 9780134725987
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
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Chapter 8, Problem 8.2S
To determine
The purchases of WGD Store during the year.
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Learning Objectives 1, 2: Show how to account for inventory in a perpetual systemusing the average-costing method) Western Trading Company purchases inventory in cratesof merchandise; each crate of inventory is a unit. The fiscal year of Western Trading ends eachJanuary 31. Assume you are dealing with a single Western Trading store in Nashville, Tennessee. The Nashville store began the year with an inventory of 20,000 units that cost a total of$1,060,000. During the year, the store purchased merchandise on account as follows:July (29,000 units at $59) ..................................... $1,711,000November (49,000 units at $63) ........................... 3,087,000December (59,000 units at $69)............................ 4,071,000Total purchases..................................................... $8,869,000Cash payments on account totaled $8,541,000. During fiscal year 2018, the store sold 155,000units of merchandise for $15,887,500, of which $4,900,000 was for cash and the balance…
I IBM Learning = Copy of Jacqueline.
Periodic Inventory Using FIFO, LIFO, and Weighted Average Cost Methods
The units of an item available for sale during the year were as follows:
Jan. 1
Inventory
4 units at $4,200
$16,800
Aug. 7
Purchase
15 units at $4,300
64,500
Dec. 11
Purchase
13 units at $4,400
57,200
32 units
$138,500
There are 18 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the
inventory cost using (a) the first-in, first-out (FIFO) method; (b) the last-in, first-out (LIFO) method; and (c) the weighted average
cost method (Round per unit cost to two decimal places and your final answer to the nearest whole dollar).
a. First-in, first-out (FIFO)
$ 78,700 V
b.
Last-in, first-out (LIFO)
77,000 V
Weighted average cost
C.
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a. When the FIFO method is used, costs are included in cost of merchandise sold in the order in which they were purchased.
b. When the LIFO method is used, the cost of the units…
Cable Knit, Inc. reported cost of goods sold of $3,800 for the current year. Its beginning inventory was $3,900 and its ending inventory was $1,400. What was the amount of purchases made during the year?
Chapter 8 Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
Ch. 8 - All of the following are reported as current...Ch. 8 - Prob. 2QCCh. 8 - Prob. 3QCCh. 8 - What is accounts payable turnover? a.Purchases on...Ch. 8 - Prob. 5QCCh. 8 - Nicholas Corporation accrues the interest expense...Ch. 8 - Phoebe Corporation signed a six-month note payable...Ch. 8 - Prob. 8QCCh. 8 - Backpack Co. was organized to sell a single...Ch. 8 - Prob. 10QC
Ch. 8 - Potential liabilities that depend on future events...Ch. 8 - A contingent liability should be recorded in the...Ch. 8 - Prob. 8.1ECCh. 8 - Prob. 8.1SCh. 8 - Prob. 8.2SCh. 8 - Prob. 8.3SCh. 8 - Prob. 8.4SCh. 8 - (Learning Objective 3: Account for a short-term...Ch. 8 - Prob. 8.6SCh. 8 - (Learning Objective 4: Report warranties in the...Ch. 8 - (Learning Objective 4: Account for accrued...Ch. 8 - (Learning Objective 5: Interpret a companys...Ch. 8 - Prob. 8.10AECh. 8 - Prob. 8.11AECh. 8 - LO 3 (Learning Objective 3: Purchase inventory,...Ch. 8 - (Learning Objective 3: Record note payable...Ch. 8 - (Learning Objective 3: Account for a short-term...Ch. 8 - Prob. 8.15AECh. 8 - Prob. 8.16AECh. 8 - Prob. 8.17AECh. 8 - Prob. 8.18AECh. 8 - Prob. 8.19AECh. 8 - Prob. 8.20BECh. 8 - Prob. 8.21BECh. 8 - LO 3 (Learning Objective 3: Purchase inventory,...Ch. 8 - Prob. 8.23BECh. 8 - Prob. 8.24BECh. 8 - Prob. 8.25BECh. 8 - Prob. 8.26BECh. 8 - Prob. 8.27BECh. 8 - (Learning Objectives 1, 2, 3, 4: Report current...Ch. 8 - Prob. 8.29BECh. 8 - Prob. 8.30QCh. 8 - For the purpose of classifying liabilities as...Ch. 8 - Prob. 8.32QCh. 8 - Prob. 8.33QCh. 8 - Prob. 8.34QCh. 8 - Prob. 8.35QCh. 8 - Prob. 8.36QCh. 8 - Prob. 8.37QCh. 8 - Prob. 8.38QCh. 8 - Prob. 8.39QCh. 8 - Prob. 8.40QCh. 8 - Prob. 8.41QCh. 8 - Prob. 8.42QCh. 8 - Prob. 8.43QCh. 8 - Group A LO 1, 2, 3, 4 (Learning Objective 1, 2, 3,...Ch. 8 - Prob. 8.45APCh. 8 - LO 1, 2, 3, 4 (Learning Objectives 1, 2, 3, 4:...Ch. 8 - LO 4, 5 (Learning Objectives 4, 5: Account for...Ch. 8 - Group B LO 1, 2, 3, 4 (Learning Objectives 1, 2,...Ch. 8 - Prob. 8.49BPCh. 8 - Prob. 8.50BPCh. 8 - Prob. 8.51BPCh. 8 - Prob. 8.52CEPCh. 8 - Prob. 8.53SCCh. 8 - Prob. 8.54DCCh. 8 - Prob. 8.55DCCh. 8 - Prob. 8.56EICCh. 8 - Prob. 1FFCh. 8 - Prob. 1GP
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- How do I solve this?arrow_forwardAt the beginning of the year, Bennett Supply has inventory of $3,500. During the year, the company purchases an additional $12,000 of inventory. An inventory count at the end of the year reveals remaining inventory of $4,000. What amount will Bennett report for cost of goods sold? a. $11,000.b. $11,500.c. $12,000.d. $12,500.arrow_forwardApply the COGS equation used on the bottom of page 6-3 of the VLN to the following data set to answer the question: The company had $20,000 in beginning inventory and during the year purchased $200,000 worth of inventory. Ending inventory at the end of the period was $10,000, what was the cost of goods sold for the year? ____arrow_forward
- A business had the following information in its acounts for the year: Net Sales 78360 Cost of goods sold 53310 Gross profit 22050 Inventory at beginning of the year 8660 Inventory at end of year 9500 what was the average days to sell inventory for the year? 5.87 8.75 41.7 41.9 62.2arrow_forwardOn Cherry Blossom Department Stores' most recent balance sheet, the balance of its inventory at the beginning of the year was $11,000. At the end of the year, the inventory balance was $17,500. During that year, its cost of goods sold was $59,000. All purchases of inventory throughout the year were on account. What was the total of Cherry Blossom's purchases during the year?arrow_forwardA company has beginning inventory for the year of $11,000. During the year, the company purchases inventory for $190,000 and ends the year with $29,000 of inventory. The company will report cost of goods sold equal to: Multiple Choice $190,000. $172,000. $219,000. $208,000.arrow_forward
- Rahularrow_forwardRussell Retail Group begins the year with inventory of $51,000 and ends the year with inventory of $41,000. During the year, the company has four purchases for the following amounts. Purchase on February 17 Purchase on May 6 Purchase on September 8 Purchase on December 4 $206,000 126,000 156,000 406,000 Required: Calculate cost of goods sold for the year. Beginning inventory Cost of goods available for sale Cost of goods soldarrow_forward5) The following data pertain to Stainless Steel Enterprises for the year ended December 31, 2020: Beginning inventory $188,200 Purchases on credit during the year 400,500 Cost of goods sold during the year 500,600 Sales (70% on credit) during the year 755,400 a. Prepare entries to record the purchase of inventory, cost of goods sold, and sales during 2020 using the perpetual inventory system. b. Compute the balance in the inventory account on December 31, 2020.arrow_forward
- Comprehensive The following information for 2019 is available for Marino Company: 1. The beginning inventory is $118,000. 2. Purchases returns of $3,000 were made. 3. Purchases of $292,000 were made on terms of 3/10, n/30. Eighty percent of the discounts were taken. 4. At December 31, purchases of $22,000 were in transit, FOB destination, on terms of 3/10, n/30. 5. The company made sales of $645,000. The gross selling price per unit is twice the net cost of each unit sold. 6. Sales allowances of $4,000 were made. 7. The company uses the LIFO periodic method and the gross method for purchase discounts. Required: 1. Compute the cost of the ending inventory before the physical inventory is taken. Ignore Sales allowances in your computations. $ 2. Compute the amount of the cost of goods sold that came from the purchases of the period and the amount that came from the beginning inventory. Cost of sales from purchases Cost of sales from beginning inventory Total cost of goods soldarrow_forward1.arrow_forward(Learning Objective 2: Compare gross profit—FIFO vs. LIFO—falling prices)Suppose a Target store in Chicago, Illinois, ended November 2018 with 500,000 units of merchandise that cost $8.00 each. Suppose the store then sold 110,000 units for $960,000 duringDecember. Further, assume the store made two large purchases during December as follows:Dec 8 35,000 units @ $6.10 = $213,50028 50,000 units @ $5.20 = $260,000Requirements1. Calculate the store’s gross profit under FIFO and LIFO at December 31.2. What caused the FIFO and LIFO gross profit figures to differ?arrow_forward
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