Chapter 8

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Please Note:
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Total
Cost
$ 748,000
960000
1,984,000
1,512,000
2,560,000
2,016,000
780,000
$ 9,812,000
$10,560,000
a.
786,000 x $20 $15,720,000
*
9,788,100
$ 5,931,900
5,102,000
$ 829,900
*

848,000 – ) x
**
Total purchases
$11.00
12.00
12.40
12.60
12.80
12.60
13.00
July
Rounded.
Cost of goods available for sale
Less ending inventory
160,000
Sept.
Nov.
Mar.
Purchases
Feb.
Beginning inventory
Average-cost method:
Sales (
Units
May 120,000
68,000
Chapter 8, P 1.
1. Schedule of cost of goods available for sale prepared
80,000
200,000
160,000
$12.45
Gross margin
Selling and administrative expenses
Income before income taxes
60,000
$10,560,000
848,000
**
$771,900
62,000
Ending inventory
Cost of goods available for sale
Divided by total units available
Cost of goods sold
786,000
Units in inventory
(
Cost per unit
(see schedule)
Cost of goods sold
780,000
848,000
2. Income before income taxes computed
Cost of goods available for sale
)
$10,560,000
771,900
Price
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Ch.8--P1-1
b.
*

$ —
$ —
*
( units x
( units x
c.
*

$ —
$ —
* x =
Less ending inventory
Cost of goods sold
Gross margin
Income before income taxes
Cost of goods sold
Cost of goods available for sale (see schedule)
FIFO method:
Less ending inventory
Cost of goods sold
Sales
Cost of goods available for sale (see schedule)
Chapter 8, P 1. (Continued)
Cost of goods sold
Gross margin
Selling and administrative expenses
Income before income taxes
Selling and administrative expenses
Sales
)
Ending inventory
November purchases
September purchases
)
LIFO method:
units from beginning inventory


$ —

$ —
$ —
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Ch.8--P1-2
( + )  ( + )  ( + )  2
(  (  ( 
inventory on hand ( 365 days  #DIV/0! times ( 365 days  #DIV/0! times ( 365 days  #DIV/0! times
Average days' #DIV/0!
Chapter 8, P 1. (Continued)
3. Ratios computed
Average-Cost FIFO
$ — $ —
LIFO
$ — $ —
Inventory turnover times times times
Cost of goods sold
Average inventory $ —
$ —
$ —
#DIV/0!
days
$ —
#DIV/0! #DIV/0!
$ —
)
#DIV/0! days
)
)
#DIV/0! days
)
)
)
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Ch.8--P1-3
1.
Unit
Price*
$ —

— #DIV/0! * $ —

— #DIV/0!
#DIV/0!
*
#DIV/0!
— #DIV/0! #DIV/0!
Unit
Units Price Amount
July 2 $ —
July 14 —
July 22
— — —
— #DIV/0! * #DIV/0!

— #DIV/0!
#DIV/0!
*
#DIV/0!
Chapter 8, P 2.
Cost of goods available for sale
Sales
June 10
Cost of goods
available for sale
July 8
July 18
July 30
Cost of goods sold for July
July 31 Ending inventory
July 26
*Rounded.
Purchases
June 17
Sales
July 1 Beginning inventory
Periodic inventory system—average-cost method
Amount Units
June 1 Beginning inventory
Purchase
June 30 Ending inventory
June 5
Cost of goods sold for June
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Ch.8--P2-1
1. 2.
Unit
Price
$ —

— $ —

— —

*
$ —
— — $ —
Unit
Units Price
July 2
July 14
July 22
— —
— $ —

— —
*
$ —
* July 22 Purchase ( — x $ — )
July 14 Purchase ( x $ — )
Total
Periodic inventory system—FIFO method
Amount Units
Sales
Amount
June 5
June 1 Beginning inventory
July 1 Beginning inventory
*From purchase on June 10.
Purchase
Cost of goods
available for sale
July 8
July 18
July 30
Cost of goods sold for July
units
units
$ —
June 30 Ending inventory
Cost of goods sold for June
June 17
Cost of goods available for sale
Sales
June 10
Chapter 8, P 2. (Continued)
$ —

July 31 Ending inventory
Purchases
July 26
$ —


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Ch.8--P2-2
1. 3.
Unit
Price
$ —

— $ —

— —
*
$ —
units x
units x
— $ —
Unit
Units Price Amount
$ —

— — —
— $ —

— —
*
$ —
units x
units x
units x
July 2 Purchase
( )

June 10 Purchase
( ) —
Total $ —
July 26
*June 1 Beginning inventory
( ) $ —
July 22
$ —
Purchases
July 2
Total
(
(
July 14
June 10 Purchase

Cost of goods available for sale
Sales
Chapter 8, P 2. (Continued)
)
June 17
June 10
June 5
Cost of goods
available for sale
July 8
July 18
July 30
Cost of goods sold for July
July 31 Ending inventory
Sales
July 1 Beginning inventory
*June 1 Beginning inventory
) $ —
June 30 Ending inventory
Cost of goods sold for June
Periodic inventory system—LIFO method
Amount Units
June 1 Beginning inventory
Purchase
Copyright  Houghton Mifflin Company. All rights reserved.
Ch.8--P2-3
1.
Units Cost* Amount*
1 $ —
5 $ —

5 — #DIV/0! $ —
10

10 — #DIV/0! $ —
17 #DIV/0!
#DIV/0!
30 — #DIV/0! #DIV/0!
2

2 — #DIV/0! #DIV/0!
8 #DIV/0!
#DIV/0!
8 — #DIV/0! #DIV/0!
14

14 — #DIV/0! #DIV/0!
18 #DIV/0!
#DIV/0!
18 — #DIV/0! #DIV/0!
22

22 — #DIV/0! #DIV/0!
26 #DIV/0!
#DIV/0!
26 — #DIV/0! #DIV/0!
30 #DIV/0!
#DIV/0!
31

#DIV/0!
#DIV/0!
Sale
Balance
Purchase
Balance
Sale
Chapter 8, P 3.
Inventory
Sale
Date
Balance
Purchase
Balance
Sale
Inventory
Purchase
Balance
Sale
Purchase
Balance
Balance
Sale
Perpetual inventory system—average-cost method
June
Cost of goods sold for July equals:
Balance
Inventory
July
*Rounded.
Cost of goods sold for June equals:
Copyright  Houghton Mifflin Company. All rights reserved.
Ch.8--P3-1
Units Cost Amount
1 $ —
5

5 — — $ —
10

10 — —
— — $ —
17 —


30 — — $ —
2

2 — —
— — $ —
8 —


8 — — $ —
14

14 — —
— — $ —
18 —

18 — —
— — $ —
22

22 — —
— —
— — $ —
26 —


26 — —
— — $ —
30 —

31 — —
— — $ —
Purchase
Balance
Sale
Balance
Purchase
Balance
Sale
2.
Sale
Inventory
Purchase
Cost of goods sold for June equals:
July
Perpetual inventory system—FIFO method
June
Cost of goods sold for July equals:
Balance
Inventory
Sale
Inventory
Balance
Sale
Balance
Purchase
Balance
Chapter 8, P 3. (Continued)
Date
Sale
Balance
Copyright  Houghton Mifflin Company. All rights reserved.
Ch.8--P3-2
Units Cost Amount
1 $ —
5 —

5 — — $ —
10

10 — —
— — $ —
17 —

30 — —
— — $ —
2

2 — —
— —
— — $ —
8 —


8 — —
— — $ —
14

14 — —
— —
— — $ —
18 —

18 — —
— —
— — $ —
22

22 — —
— —
— —
— — $ —
26 —

26 — —
— —
— —
— — $ —
30 —

31 — —
— —
— —
— — $ —
Sale
Chapter 8, P 3. (Continued)
3.
Purchase
Date
Inventory
Purchase
Balance
Balance
Balance
Sale
Balance
Purchase
Balance
Sale
Balance
Perpetual inventory system—LIFO method
June
Inventory
Sale
Inventory
Purchase
Sale
July
Sale
Balance
Balance
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Ch.8--P3-3
Cost Retail
1.

$ — $ —
$ —
$ —
#DIV/0!
$ — x #DIV/0! = #DIV/0!
2.
x #DIV/0! =
#DIV/0! —
3. #DIV/0! $ —
$ —
$ —
Sales Returns and Allowances
Net Sales
Sales
July 31 Physical Inventory
= #DIV/0!
Estimated Cost of Ending Inventory
Ratio of Cost to Retail Price:
Ending Inventory at Retail
Ratio of Cost to Retail
Estimated Inventory Shortage at Cost and Retail
Freight In
Beginning Inventory
Net Purchases for the Period
Purchases
Purchases Returns and Allowances
Merchandise Available for Sale
Sales During the Period
Chapter 8, P 4.
Copyright  Houghton Mifflin Company. All rights reserved.
Ch.8--P4-1
Purchases at Cost
Purchases Returns
Freight In
Net Purchases

$ —
Sales
Sales Returns
Net Sales $ —
Less Estimated Gross Margin of 48%
Estimated Cost of Goods Sold

$ —
$ —
Chapter 8, P 5.
Schedule to Estimate Inventory Destroyed
April 27, 20xx
Brandon Oil Products
Recovered Inventory
Estimated Destroyed Inventory
Beginning Inventory at Cost
Cost of Goods Available for Sale
Estimated Cost of Goods Sold
Estimated Cost of Ending Inventory
Copyright  Houghton Mifflin Company. All rights reserved.
Ch.8--P5-1
Total
Units Cost
$ —






— $ —
a.
x $ —
*
#DIV/0!
#DIV/0!
#DIV/0!
* $ —


#DIV/0!
— – — ) x

#DIV/0!
**
#DIV/0!
Rounded.
**
Cost of goods available for sale (see schedule) $ —
August
October
Purchases
February
Beginning inventory
Price
April
June
2. Income before income taxes computed
November
Cost of goods available for sale
Average-cost method:
) Sales (
Less ending inventory
Cost of goods sold
Cost of goods sold
Cost of goods available for sale
Gross margin
Selling and administrative expenses
Income before income taxes
Chapter 8, P 6.
1. Schedule of cost of goods available for sale prepared
**
Ending inventory
Units in inventory (
Divided by total units available
Cost per unit
Copyright  Houghton Mifflin Company. All rights reserved.
Ch.8--P6-1
b.
$ —
*

$ —
$ —
* 155 $ — =
c.
$ —
*

$ —
$ —
* ( $ — )
( $ — )
$ — Ending inventory
units x
units x

$ —
Income before income taxes
Gross margin
Selling and administrative expenses
Income before income taxes
Gross margin
Chapter 8, P 6. (Continued)
Sales
Cost of goods available for sale (see schedule) $ —
units from November purchase x
Selling and administrative expenses
Cost of goods sold

Cost of goods sold
Beginning inventory
LIFO method:
Sales
FIFO method:
Less ending inventory
Cost of goods sold
February purchase
$ —

Cost of goods sold
Cost of goods available for sale (see schedule) $ —
Less ending inventory
Copyright  Houghton Mifflin Company. All rights reserved.
Ch.8--P6-2
( + )  ( + )  ( + ) 
(  (  ( 
inventory on hand ( 365 days  #DIV/0! times ( 365 days  #DIV/0! times ( 365 days  #DIV/0! times )
)
)
#DIV/0! days
)
)
#DIV/0! days
)
days
$ — $ — $ — #DIV/0! #DIV/0! $ —
#DIV/0!
$ —
$ —
#DIV/0! $ — $ — $ —
#DIV/0! #DIV/0!
$ —
$ — $ —
Inventory turnover times times times
Cost of goods sold #DIV/0!
Ratios computed
Average days' #DIV/0!
Average inventory
Average-Cost FIFO
#DIV/0! $ —
LIFO
Chapter 8, P 6. (Continued)
3.
Copyright  Houghton Mifflin Company. All rights reserved.
Ch.8--P6-3
1.
#DIV/0!
#DIV/0!
— #DIV/0! * $ —

— #DIV/0!
#DIV/0!
*
#DIV/0!
— #DIV/0! #DIV/0!
Unit
Units Price Amount
April 4 $ —
April 15 —
April 25
— — —
— #DIV/0! #DIV/0!

— #DIV/0!
#DIV/0!
Chapter 8, P 7.
March 10
March 7
March 1 Inventory
Purchase
Cost of goods sold for March
March 19
Cost of goods available for sale
Sales
Cost of goods
available for sale
April 11
April 23
April 27
Cost of goods sold for April
April 30 Ending inventory
Purchases
Sales
April 1 Beginning inventory
*Rounded.
Periodic inventory system—average-cost method
Unit
Price Amount Units
March 31 Ending inventory
Copyright  Houghton Mifflin Company. All rights reserved.
Ch.8--P7-1
1. 2.
$ —

— $ —

— —
*
$ —
— $ —
Unit
Units Price Amount
April 4 $ —
April 15 —
April 25
— — —
— $ —

— —
*
$ —
Periodic inventory system—FIFO method
Unit
Price Amount Units
Purchase
Sales
*From purchase on April 25.
Purchases
April 30 Ending inventory
April 1 Beginning inventory
*From purchase on March 10.
March 10
March 7
March 19
Cost of goods available for sale
Sales
March 1 Inventory
Cost of goods
available for sale
April 11
April 23
April 27
Cost of goods sold for April
March 31 Ending inventory
Cost of goods sold for March
Chapter 8, P 7. (Continued)
Copyright  Houghton Mifflin Company. All rights reserved.
Ch.8--P7-2
1. 3.
Unit
Price
$ —

— $ —

— —
*
$ —
units x $ —
units x $ —
— $ —
Unit
Units Price Amount
#DIV/0!
#DIV/0!
#DIV/0!
— —
— $ —

— —

*
$ —
April 15
Cost of goods available for sale
Sales
April 25
$ —
Purchases
March 19
April 4
March 31 Ending inventory
(
(
March 7
March 10 Purchase
Cost of goods sold for March
March 10
Chapter 8, P 7. (Continued)
)
Cost of goods
available for sale
April 11
April 23
April 27
Cost of goods sold for April
April 30 Ending inventory
Sales
April 1 Beginning inventory
*March 1 Beginning inventory
)

$ —
*From March 1 inventory.
Periodic inventory system—LIFO method
Amount Units
March 1 Inventory
Purchase
Copyright  Houghton Mifflin Company. All rights reserved.
Ch.8--P7-3
1.
Units Cost* Amount*
1 $ —
7 $ —

7 — #DIV/0! $ —
10

10 — #DIV/0! $ —
19 #DIV/0!
#DIV/0!
31 — #DIV/0! #DIV/0!
4

4 — #DIV/0! #DIV/0!
11 #DIV/0!
#DIV/0!
11 — #DIV/0! #DIV/0!
15

15 — #DIV/0! #DIV/0!
23 #DIV/0!
#DIV/0!
23 — #DIV/0! #DIV/0!
25

25 — #DIV/0! #DIV/0!
27 #DIV/0!
#DIV/0!
30

#DIV/0!
#DIV/0!
Cost of goods sold for March equals:
Apr.
Perpetual inventory system—average-cost method
Mar.
Cost of goods sold for April equals:
Balance
Inventory
Balance
Sale
*Rounded.
Purchase
Balance
Inventory
Purchase
Balance
Sale
Balance
Purchase
Balance
Purchase
Balance
Sale
Inventory
Sale
Date
Chapter 8, P 8.
Sale
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Ch.8--P8-1
1. 2.
Units Cost Amount
1 $ —
7

7 — $ —
10

10 — —
— — $ —
19 —


31 — — $ —
4

4 —
— — $ —
11 —


11 — — $ —
15

15 — —
— — $ —
23 —

23 — — $ —
25

25 — —
— — $ —
27 —


30


$ —
Chapter 8, P 8. (Continued)
Date
Inventory
Balance
Sale
Balance
Purchase
Balance
Inventory
Purchase
Balance
Perpetual inventory system—FIFO method
Mar.
Cost of goods sold for March equals:
Cost of goods sold for April equals:
Apr.
Balance
Sale
Sale
Balance
Purchase
Balance
Sale
Sale
Inventory
Purchase
Copyright  Houghton Mifflin Company. All rights reserved.
Ch.8--P8-2
1. 3.
Units Cost Amount
1 $ —
7

7 — $ —
10

10 — —
— — $ —
19 —

31 — —
— — $ —
4

4 — —
— —
— — $ —
11 —

11 — —
— —
— — $ —
15

15 — —
— —
— —
— — $ —
23 —



23 — —
— — $ —
25

25 — —
— —
— — $ —
27 —

30 — —


$ —
Sale
Balance
Apr.
Perpetual inventory system—LIFO method
Mar.
Inventory
Inventory
Purchase
Sale
Purchase
Balance
Balance
Sale
Balance
Sale
Balance
Purchase
Balance
Sale
Date
Inventory
Chapter 8, P 8. (Continued)
Purchase
Balance
Cost of goods sold for March equals:
Cost of goods sold for April equals:
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Ch.8--P8-3
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Ch.8--P8-3