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CHAPTER 7

Problem 7-1
roblem 7-5
1.
1.
2.
2.
3.
3.
4.
4.
5.
5.
6.
6.
7.
7.
8.
8.
9.
9.
10.

Problem 7-2

Problem 7-3

Problem 7-4

1. D

1. B

1. D

2. D

2. A

2. C

3. A

3. A

3. C

4. C

4. C

4. A

5. D

5. C

5. A

6. A

6. D

6. C

7. D

7. C

7. A

8. A

8. A

8. C

9. A

9. A

9. A

C
B
B
D
A
D
C
D
D
D
D
C
A
A
B
A
B
A

10. B

10. D

10. A
Problem 7-6
Items counted in the bodega
4,000,000
Items included in count specifically segregated per sales contract
( 100,000)
Items returned by customer
50,000
Items ordered and in receiving department
400,000
Items shipped today, FOB destination
150,000
Items for display
200,000
Items on counter for sale
800,000
Damaged and unsalable items included in count
( 50,000)
Items in shipping department
250,000
5,700,000
Problem 7-7
Materials
1,400,000
Goods in process
650,000
Finished goods in factory
2,000,000
Finished goods in company-owned retail store (750,000/150%)
500,000
Finished goods in the hands of consignees (400,000 x 60%)

10. C

240,000
Finished goods in transit
250,000
Finished goods out on approval
100,000
Materials in transit (330,000 + 30,000)
360,000
Correct inventory
5,500,000
Problem 7-8
Finished goods
2,000,000
Finished goods held by salesmen
100,000
Goods in process (720,000/80%)
900,000
Materials
1,000,000
Materials returned to suppliers for replacement
100,000
Factory supplies (110,000 + 60,000)
170,000
Correct inventory
4,270,000
89
Problem 7-9
1. Inventory

50,000
Income summary
50,000

2. Accounts payable
Purchases

75,000
75,000

3. Purchases

30,000
Accounts payable
30,000

Inventory
Income summary
30,000
4. Income summary
Inventory
90,000
5. Purchases

90,000

140,000

Accounts payable
140,000
Problem 7-10
1. EXCLUDE

30,000

The term of the shipment is FOB destination.

2. EXCLUDE

The goods are held only for consignment.

3. INCLUDE

There is no perfected sale yet as of December 31, 2008.

4. INCLUDE
.

The term FOB supplier s warehouse is synonymous with FOB shipping point

5. EXCLUDE
ically

There is already a constructive delivery since the article was specif


made according to the customer s specifications and the art

icle is already
completed on December 31, 2008.
Problem 7-11
Inventory before adjustment
7,600,000
Goods out on consignment
1,000,000
Goods purchased FOB shipping point
250,000
Goods sold FOB shipping point
850,000)
Goods sold FOB destination
260,000
Goods sold FOB destination
840,000
Correct December 31 inventory
9,100,000

90
Problem 7-12
Inventory per book
950,000
Item 3 (18,500 1,000 / 140%)
12,500
Item 4 (50,000 + 2,500)
52,500
Item 5 (35,000 / 140% = 25,000 + 2,000)
27,000
Adjusted inventory
1,042,000
Problem 7-13
Requirement a
Periodic System
Perpetual System
1. Purchases
y
800,000
Accounts payable
ounts payable

800,000

1. Merchandise inventor
800,000

800,000

Acc

2. Accounts payable
50,000
Purchase returns
chandise inventory
3. Accounts payable
600,000
Cash
600,000
4. Accounts receivable
1,580,000
Sales
1,580,000

50,000

50,000

Mer

50,000
600,000

3. Accounts payable
600,000

1,580,000

Cash

4. Accounts receivable
1,580,000

5. Sales return
40,000
790,000
Accounts receivable
inventory
790,000
6. Cash

2. Accounts payable

1,360,000

40,000
Accounts receivable
eivable
40,000
7. Inventory-Dec. 31
60,000
ory
20,000
Income summary
s
20,000
(60 x 1,000)

Sales
Cost of sales

40,000

Merchandise

5. Sales return
1,360,000

Accounts rec
Merchandise invent

60,000

Cost of sale

6. Cash
1,360,000
Accounts receivable
1,360,000
7. Inventory shortage
10,000
Merchandise inventor
y

10,000
Merchandise inventory per

book

70,000
Physical count
Shortage

60,000
10,000
Requirement b
Periodic System
System
January
Inventory
Purchases
800,000
0,000)
770,000
Purchase returns
(
y shortage
10,000
Goods available for sale
sales
780,000
Less: Inventory
December 31
Cost of sales

Perpetual
90,000

Cost of sales recorded


(790,000

50,000)

750,000
840,000

60,000
780,000

Inventor

Adjusted cost of

91
Problem 7-14
Company A
List price
500,000
Less: First trade discount (20% x 500,000)
100,000
400,000
Second trade discount (10% x 400,000)
40,000
360,000
Third trade discount (10% x 360,000)
36,000
Invoice price
324,000
Less: Cash discount (2% x 324,000)
6,480
Payment within the discount period
317,520
Company B
List price
500,000
Less: Trade discount (35% x 500,000)
175,000
Invoice price
325,000
Less: Cash discount (2% x 325,000)
6,500
Payment within the discount period
318,500
Problem 7-15
Requirement a
Gross method
Net method
1. Purchases
655,000
Accounts payable
nts payable
2. Freight in
250,000
Cash

4,750,000

1. Purchases

4,

4,750,000

Accou

4,655,000
250,000

2. Freight in
250,000

Cash

250,000
3. Accounts payable
17,000
Cash
1,617,000
Purchase discount
Accounts payable

1,650,000

3. Accounts payable
1,617,000

1,6

Cash
33,000

2,100,000

Accounts payable

2,0

58,000
lost

Cash
42,000

2,100,000

Purchase discount
Cash

2,100,000
4. No entry
20,000

4. Purchase discount lost


Accounts payable
20,000
(1,000,000 x 2%)

5. Inventory
1,000
Income summary
y

1,000,000

5. Inventory
1,000,000

98
Income summar

981,000

92
Requirement b
Gross method
Net method
Purchases
4,655,000
Freight in
250,000
Total
4,905,000
Less: Purchase discounts
-___
Goods available for sale
4,905,000
Less: Inventory
December 31
981,000
Cost of sales
3,924,000
Ending inventory:
Gross (5,000,000/5)
0,000
Net (4,905,000/5)
981,000

4,750,000
250,000
5,000,000
33,000
4,967,000
1,000,000
3,967,000

1,00

Problem 7-16
Gross method
Sept. 1

Purchases

650,000
Accounts payable

650,000
1

Freight in

20,000
Accounts payable

20,000
7

Accounts payable
Purchase returns and allowances
10,000

Oct. 1

10,000

Accounts payable
Cash
660,000

660,000

Net method
Sept. 1

Purchases

637,000
Accounts payable

637,000
1

Freight in

20,000
Accounts payable
20,000
7

Accounts payable (10,000 x 98%)


Purchase returns and allowances
9,800

Oct. 1

9,800

Accounts payable (657,000


9,800)
Purchase discount lost (2% x 640,000)
Cash
660,000

647,200
12,800

93
Problem 7-17
Gross method
Net method
1. Merchandise inventory
980,000
Accounts payable
ts payable
2. Accounts payable
le
50,000
Cash
50,000

1,000,000

1. Merchandise inventory
1,000,000

Accoun

980,000
50,000

2. Accounts payab
50,000

3. Accounts payable
le
784,000
Cash
x 98%)
784,000
Cost of sales

800,000

4. Accounts payable
le
146,000
Cash

150,000

Cash
3. Accounts payab

784,000

Cash (800,000
16,000
4. Accounts payab

150,000

Purchase discount los

4,000
Cash

150,000
5. Cash
1,200,000
Sales
1,200,000

1,200,000

5. Cash
1,200,000

Cost of sales
of sales
686,000
Merchandise inventory
dise inventory
686,000
(1,000,000 x 70%)

Sales

700,000

Cost

700,000

Merchan
(980,000 x 70%)

Problem 7-18
Units
cost
1. FIFO - periodic
Lot No. 4
100
90

Unit

Total cost
500

50,000
5
1,305,000

14,500
15,000

1,355,000
2. Beginning inventory
800,000
Purchases: Lot No. 1
100
200,000
110

880,000

120

720,000

100

950,000

10,000

80
2,000

8,000

6,000

9,500

14,500

90
1,305,000
Goods available for sale
4,855,000
Weighted average (4,855,000/50,000)
1,456,500

50,000
15,000

97.10

3. Specific identification
Lot 3
720,000
4
100
900,000

6,000

120
9,000

15,000
1,620,000
31
FIFO

Goods available

Inventory-Dec.

4,855,000

1,355,000

4,855,000

1,456,500

4,855,000

1,620,000

Cost of sales

3,500,000
Weighted average
3,398,500
Specific identification
3,235,000

94
Problem 7-19
Units

Unit cost

Total cost
FIFO
December 17

10,000

45

450,000
22

20,000

43

860,000
30,000

1,310,000
Average method
December 1
52
520,000

10,000
7

50

1,500,000

45

2,700,000

30,000

17

60,000

22
860,000
Available for sale
5,580,000

43

Inventory (5,580,000/120,000)
1,395,000

20,000
120,000
30,000

46.50

FIFO
Average
Goods available for sale
5,580,000
5,580,000
Less: Inventory
December 31
0
1,395,000
Cost of goods sold
4,270,000
4,185,000

1,310,00

Problem 7-20
The stock cards are not prepared anymore. The end results are simply given.
Units

Unit cost

Total cost
FIFO
Ending inventory
840,000

4,000

210

4,000

252.50

Cost of sales
2,700,000
Average method
Ending inventory
1,010,000
Cost of sales
2,530,000
Problem 7-21
Purchases
ory increment

Sales

Invent

2006
1,000
2007
2,000
2008
3,000
Total inventory
6,000

5,000

4,000

9,000

7,000

15,000

12,000

December 31, 2008 (units)

Sales
1,200,000
Cost of sales:
Inventory December 31, 2007 (3,000 x 60)
Purchases
000
Goods available for sale
000
Less: Inventory
December 31, 2008 (6,000 x 75)
,000
855,000
Gross income
345,000

180,000
1,125,
1,305,
450

95
Problem 7-22
Units
t
FIFO
October 1

Unit cos

Total cost
15,000

60

10,000

40

15,000

50

25,000

60

900,000
Weighted average periodic
January 1
400,000
April
1
750,000
October 1
1,500,000
Goods available for sale
2,650,000
Less: Sales
Ending inventory
Weighted average (2,650,000/50,000)
795,000

50,000
35,000
15,000
15,000

53
Units

Unit cost
Total cost
Moving average perpetual
January 1
400,000
31
40
( 200,000)
Balance
200,000
April 1
50
750,000
Total
950,000
July 31

10,000

40
( 5,000)

5,000

40
15,000
20,000

47.50
(18,000)

47.50
Balance

855,000)
2,000

47.50

95,000
October 1
1,500,000
Total
1,595,000
December 31
( 708,840)
Balance
886,160

25,000

60__

27,000

59.07

(12,000)

59.07

15,000

59.07
FIFO

We

ighted average
Inventory

January 1
400,000
Purchases
2,250,000
2,250,000
Goods available for sale
2,650,000
Less: Inventory
December 31
795,000
Cost of sales
1,855,000
Cost of sales Weighted average perpetual
January
31 Sale
200,000
July
31 Sale
855,000
December 31 Sale
708,840
Total cost of sales
1,763,840

400,000
2,650,000
900,000
1,750,000

Problem 7-23
Units
cost
Total cost
FIFO
October 1 purchase
3,000,000

Unit

300

10,000

96
Units
cost
Total cost
Weighted average
January 1
1,500,000
April
5
2,700,000
October 1
10,000
5,000,000
Goods available for sale
9,200,000
Inventory December 31 (9,200,000/1,000)
2,760,000

Unit

200

7,500

300

9,000
500

1,000
300

9,200

FIFO
Weighted average
Inventory
January 1
1,500,000
Purchases
7,700,000
Goods available for sale
9,200,000
Less: Inventory
December 31
0
Cost of goods sold
6,440,000
Problem 7-24

1,500,000
7,700,000
9,200,000
3,000,000

2,760,00

6,200,000

Sales
6,000,000
Gross profit
(2,400,000)
Cost of goods sold
3,600,000
Inventory July 31 (see below)
928,000
Cost of goods available for sale
4,528,000
Purchases for July
(3,174,000)
Inventory July 1
1,354,000
Quantity
t
July 12

Unit cos

Total cost
1,000

60

60,000
25
62
FIFO inventory
928,000
Problem 7-25

14,000
868,000
July 31

1. Cost of units available for sale for July


1,452,100
Purchases for July
(1,042,100)
Cost of inventory
July 1
410,000
Number of units
102,500
2.

July 1 (410,000 / P4)

July 1 inventory
102,500
Purchases for July
200,000
Total units available for sale for July
302,500
July 31 inventory
( 60,000)
Units sold during the month of July
242,500

15,000

3. Average unit cost (1,452,100 / 302,500)


4.80
Inventory
July 31 (60,000 x 4.80)
288,000
Another computation (1,452,100
288,000

1,164,100)

97
Problem 7-26
Units

Average unit cost

1. Inventory

Total cost

December 31, 2007

2007 layer
1,518,000
2. Inventory December 31, 2006
1,480,000
Purchases
2007
1,656,000
Materials available
3,136,000
Less: Inventory
December 31, 2007
1,518,000
Raw materials used 2007
1,168,000

11,000
14,000
12,000

Problem 7-27
Available for sale
42,000
Units sold (2,800,000/100)
28,000
Ending inventory
14,000

138

26,000
11,000
15,000

3. Inventory December 31, 2008


2008 layer
2,295,000
4. Inventory December 31, 2007
1,518,000
Purchases
2008
3,060,000
Materials available
4,578,000
Less: Inventory
December 31, 2008
2,295,000
Raw materials used 2008
2,283,000

138

15,000

153

11,000
20,000
31,000
15,000
16,000

153

Units
it cost
Total cost
FIFO
September 5
86,000
25
42.50
510,000

Un

2,000

43.00
12,000

14,000
596,000
Weighted average (1,753,500/42,000)
41.75
584,500

14,000
Average

FIFO
Available for sale
1,753,500
Less: Ending inventory
596,000
Cost of sales
69,000
1,157,500

1,753,500
584,500
1,1
(

Sch. 1)

(Sch. 2)

98
Problem 7-28
2006
2008
Cost of sales
Average
2,400,000
Understatement of ending inventory:
2006
0
2007
0,000)
200,000
2008
___
( 270,000)
Cost of sales FIFO
00
2,330,000
2008
Sales
00
4,800,000
Cost of sales FIFO
00
2,330,000
Gross income
00
2,470,000
Operating expenses
,000
1,000,000
Operating income
000
1,470,000

1,500,000

2007
2,000,000

( 150,000)

150,00
(

_______

20

_____

1,350,000

1,950,0

2006

2007

3,000,000

4,000,0

1,350,000

1,950,0

1,650,000

2,050,0

800,000

900

850,000

1,150,

Proof
Net income
Average
1,400,000
Understatement of ending inventory:
2006
,000)
2007
0,000
( 200,000)
2008
_
270,000
Net income FIFO
1,470,000

700,000

1,100,000
150,000

150
20

_______

____

850,000

1,150,000

Problem 7-29
Lower of
cost or NRV

Units
Inventory value
Materials:
R
100,000
S
500,000
T
900,000
Goods in process:
X
1,920,000
Y
3,100,000
Finished goods:
A
1,580,000
B
1,460,000

1,000

100

2,000

250

3,000

300

4,000

480

5,000

620

2,000

790

2,000

730

Valuation at lower of cost or NRV


9,560,000

99
Problem 7-30
(Low
er of cost or NRV)
Units
Inventory value
A
120,000
B
165,000
C
168,000
D

Unit cost

NRV

1,000

120

150

1,500

110

120

1,200

150

140

1,800

140

160

252,000
E

1,700

130

160

221,000
926,000
Problem 7-31
Product
cost or NRV
1
650
2
475
3
250
4
450

Unit cost

NRV

Lower of

700

650

475

745

255

250

450

740

Problem 7-32
Units
Lower of cost or NRV
Appliances:
A
2,700
1,250,000
B
3,600
1,080,000
Car accessories
C
840,000
D
1,600,000
Valuation at lower of cost or NRV
4,770,000
Problem 7-33
1. September 30 (40,000 x 75)
3,000,000
December 31 (10,000 x 90)
900,000
Total FIFO cost
3,900,000
NRV (50,000 x 72)
3,600,000
Loss on inventory writedown
300,000
Inventory
January 1
1,200,000
Purchases
9,400,000
Purchase discount
(
400,000)
Goods available for sale
10,200,000
Less: Inventory
December 31
3,900,000

Unit cost

NRV

500

2,500

300

3,700

600

1,400

2,000

800

2,100

2,000

Cost of goods sold before inventory writedown


6,300,000
Loss on inventory writedown
300,000
Cost of goods sold after inventory writedown
6,600,000
2. Inventory
December 31
Income summary
00,000

3,900,000
3,9

100
Loss on inventory writedown
Allowance for inventory writedown
300,000

300,000

Problem 7-34
a.
No adjustment is necessary because the market price is higher than the a
greed price. Any gain on purchase commitment is not recognized.
b.
No adjustment is necessary because the market price has not declined as
of December 31, 2008. The market decline is only a possible loss.
c.

Loss on purchase commitment (10,000 x 30)


Estimated liability for purchase commitment

300,000

300,000
d.

Purchases (100,000 x 150)


1,500,000
Loss on purchase commitment
Estimated liability for purchase commitment
Accounts payable (10,000 x 200)
2,000,000

200,000
300,000

e. Purchases
000
Estimated liability for purchase commitment
Accounts payable
2,000,000
Gain on purchase commitment
300,000

2,000,
300,000

Problem 7-35
12/31/2008

03/31/2009

Loss on purchase commitment


Estimated liability for PC
500,000

Purchase (100,000 x 54)


Estimated liability for PC
Accounts payable
5,500,000
Gain on purchase commitment
400,000

Problem 7-36

500,000

5,400,000
500,000

Purchase price
6,850,000
Improving and subdividing cost
3,500,000
Total cost
70,350,000

2
4

Sales price
n
Group
1

Fractio

Cost

(20 x 3,000,000)
40,200,000
2
(10 x 2,500,000)
25/105
16,750,000
3
(10 x 2,000,000)
20/105
13,400,000

60,000,000

60/105

25,000,000
20,000,000
105,000,000

70,350,000
101
Cost per lot

Unsold

Cost
Group
1
5
2
4
3
3

(40,200,000/20)
10,050,000
(16,750,000/10)
6,700,000
(13,400,000/10)
4,020,000

2,010,000
1,675,000
1,340,000

20,770,000
Problem 7-37
Inventory

Accounts payable

Net sales
Unadjusted
1,200,000
1
2
3
4
(
5
6
7

1,750,000
8,500,000
(

35,000)
50,000

50,000

20,000

26,000

40,000)
25,000
30,000
-

60,000

8
20,000
Adjusted
8,425,000

10,000
-_ __
1,911,000

1,330,000

Problem 7-38
Inventory
Net sales
Unadjusted
9,000,000
1
00)
2
3
4
5
000

Accounts payable

1,250,000
(

1,000,000
165,000)

( 165,0

20,000)

40,000)
210,000
25,000
- ___
1,300,000

25,
860,000

9,040,000
Problem 7-39
1. Biological asset
00,000
Cash
600,000

2. Biological asset
00,000
Gain from change in fair value
700,000

3. Biological asset
00,000
Gain from change in fair value
100,000

4. Loss from change in fair value


Biological asset
90,000

90,000

102
Problem 7-40
Requirement 1
1. To record the purchase of one animal aged 2.5 years on July 1.
Biological assets
Cash

108

108
2. To record the birth of one animal on July 1 with fair value of P70.
Biological assets
Cash
70

70

3. To record the change in the fair value:


Biological assets
Cash

222

222
Fair value of 10 animals on January 1 (10 x P100)
1,000
Newborn animal on July 1 at fair value
70
Acquisition cost of one animal on July 1
108
Total book value of biological assets
December 31
1,178
Fair value of 3-year old animals on December 31 (11 x P120)
1,320
Fair value of 0.5-year old animal on December 31, the newborn (1 x P80)
80
Total fair value
December 31, 2008
1,400
Book value of biological assets December 31
1,178
Increase in fair value
222
Requirement 2
Statement of financial position :
Biological assets
1,400
Income statement:
Gain from change in fair value (70 + 222)
292
Problem 7-41 Answer C
Physical count
1,500,000
Problem 7-42 Answer D
Physical count
2,500,000
Merchandise shipped FOB shipping point on December 30, 2008
from a vendor
100,000
Goods shipped FOB shipping point to a customer on January 4, 2009
400,000
Correct inventory
3,000,000
103
Problem 7-43 Answer D

Problem 7-44 Answer D


Markup (40% x 500,000)
200,000
Goods received on consignment
400,000
Total reduction
600,000
Problem 7-45 Answer B
Inventory shipped on consignment
600,000
Freight paid
50,000
Consigned inventory
650,000
Problem 7-46 Answer A
Reported inventory
2,000,000
Goods sold in transit, FOB destination
200,000
Goods purchased in transit, FOB shipping point
300,000
Correct amount of inventory
2,500,000
Problem 7-47 Answer A
Problem 7-48 Answer A
Consignment sales revenue (40 x P10,000)
400,000
Problem 7-49 Answer B
Sales (900 x 1,000)
900,000
Commission (10% x 900,000)
( 90,000)
Payable to consignor
810,000
Problem 7-50 Answer C
List price
900,000
Trade discounts 20% x 900,000
(180,000)
720,000
10% x 720,000
( 72,000)
Invoice price
648,000

Freight
50,000
Cost of purchase
698,000
104
Problem 7-51 Answer B
List price
1,000,000
Trade discounts 20% x 1,000,000
200,000)

800,000
10% x 800,000
( 80,000)
Invoice price
720,000
Cash discount (5% x 720,000)
( 36,000)
Net amount
684,000
Freight charge
50,000
Total remittance
734,000
Problem 7-52 Answer A
Problem 7-53 Answer B
Purchases of IBM compatibles
00,000
Purchases of commercial software packages
00,000
Total
2,900,000
Less: Purchase return
(
50,000)
Net purchases
2,850,000

1,7
1,2

Discounts available on purchases (2% x 2,850,000)


57,000
Less: Purchase discount taken
17,000
Purchase discount lost
40,000
Problem 7-54 Answer D
Accounts payable per book
2,000,000
Goods lost in transit, FOB shipping point
100,000
Purchase return
50,000)
Adjusted balance

2,050,000
Problem 7-55 Answer D
Accounts payable per book
900,000
Undelivered checks
400,000
Unrecorded purchases on December 28 (150,000 x 98%)
147,000
Purchase on December 20 (200,000 x 95%)
190,000
1,637,000
Problem 7-56 Answer A
Net sales per book
5,000,000
Sales return
(
50,000)
Goods shipped on December 31, 2008
300,000
Goods shipped on January 3, 2009 recorded on December 30, 2008
)
Adjusted balance
5,050,000

200,000

105
Problem 7-57 Answer A
Gross sales
4,000,000
Estimated sales return (10% x 4,000,000)
(
400,000)
Net sales
3,600,000
Problem 7-58 Answer A
Units

Unit cost

Total cost
January 18

15,000
345,000
28

24
240,000
Total FIFO cost
585,000

23
10,000

25,000

Problem 7-59 Answer A


(4,500 x 73.50)
330,750
Problem 7-60 Answer A
t
January 10

Units

Unit cos

2,000

100

Total cost

200,000
February 8

3,000

110

330,000
5,000
530,000
Weighted average unit cost (530,000/5,000)
106
Cost of inventory (3,000 x 106)
318,000
Problem 7-61 Answer B
Units
ost
January 1
5
January 17
5
Balance
25,000
January 28
8
Balance
7.40

Unit c

Total cost
40,000
200,000
(35,000)
(175,000)
5,000

5
20,000

160,000
25,000
185,000

Problem 7-62 Answer D


Units
Total cost
January 1
April
October 1
0
Total

200
300,000
3
525,000

300
50

1,000,000
1,000

1,825,000
Less: Sales (400 + 400)
0
Ending inventory
0

80
20

Average unit cost (1,825,000/1,000)


1,825
Cost of inventory (200 x 1,825)
365,000
106
Problem 7-63 Answer C
Units
st
January
200

1
1,600,000
8
( 800,000)

8,000

200
( 4,000)

4,000
800,000

Unit co

Total cost

200

20
0
240
(3,680,000/16,000 = 230)
230
3,680,000

12,00
2,880,000
16,000

Problem 7-64 Answer C

Problem 7-65
Answer B
Estimated selling price
4,050,000
Cost of disposal
( 200,000)
Net realizable value (lower than cost)
3,850,000
Problem 7-66 Answer B
Estimated sales price
4,000,000
Cost to complete
(1,200,000)
Net realizable value
2,800,000
FIFO cost (lower than NRV)
2,600,000
Problem 7-67 Answer B
Inventory

January 1
700,000

Purchases
3,300,000
Goods available for sale
4,000,000
Less: Inventory
December 31
600,000
Cost of goods sold before inventory writedown
400,000
Loss on inventory writedown
100,000
Cost of goods sold after inventory writedown
500,000

3,

3,

Problem 7-68 Answer C


Sales price
A
B
C

Allocated cost
(100 x 240,000)
6,000,000
(100 x 160,000)
4,000,000
(200 x 100,000)
5,000,000

24,000,000

24/60

16,000,000

16/60

20,000,000

20/60

60,000,000
15,000,000

Fraction

Problem 7-69 Answer B


Problem 7-70 Answer B