delivery of no earlier than January 10, 2020.

”
Instructions

Prepare correcting general journal entries required at December 31, 2019,

assuming that the books have not been closed.
E8.5 (LO2) (Determining Merchandise Amounts—Periodic) Two or more
items are omitted in each of the tabulations of income statement data
shown below.

2018 2019 2020

Sales revenue £290,000 £ ? £410,000
Sales returns and allowances 6,000 13,000 ?
Net sales ? 347,000 ?
Beginning inventory 20,000 32,000 ?
Ending inventory ? ? ?
Purchases ? 260,000 298,000
Purchase returns and allowances 5,000 8,000 10,000
Freight-in 8,000 9,000 12,000
Cost of goods sold 238,000 ? 303,000
Gross profit on sales 46,000 91,000 97,000
Instructions

Fill in the amounts that are missing.

E8.6 (LO2) (Purchases Recorded Net) Presented below are transactions
related to Guillen, Ltd.
May Purchased goods billed at £20,000 subject to cash discount terms of
10 2/10, n/60.
11 Purchased goods billed at £15,000 subject to terms of 1/15, n/30.
19 Paid invoice of May 10.
24 Purchased goods billed at £11,500 subject to cash discount terms of
2/10, n/30.
Instructions

a. Prepare general journal entries for the transactions above under the
 assumption that purchases are to be recorded at net amounts after
cash discounts and that discounts lost are to be treated as financial
expense.
b. Assuming no purchase or payment transactions other than those given
above, prepare the adjusting entry required on May 31 if financial
statements are to be prepared as of that date.
E8.7 (LO2) (Purchases Recorded, Gross Method) Ohno Industries
purchased ¥12,000 of merchandise on February 1, 2019, subject to a trade
discount of 10% and with credit terms of 3/15, n/60. It returned ¥3,000
(gross price before trade or cash discount) on February 4. The invoice was
paid on February 13. (All amounts in thousands.)
Instructions

a. Assuming that Ohno uses the perpetual method for recording

merchandise transactions, record the purchase, return, and payment
using the gross method.
b. Assuming that Ohno uses the periodic method for recording
merchandise transactions, record the purchase, return, and payment
using the gross method.
c. At what amount would the purchase on February 1 be recorded if the
net method were used?
E8.8 (LO2, 3) (Periodic versus Perpetual Entries) Chippewas Company
sells one product. Presented below is information for January for
Chippewas Company.

Jan. 1 Inventory 100 units at $6 each

4 Sale 80 units at $8 each
11 Purchase 150 units at $6.50 each
13 Sale 120 units at $8.75 each
20 Purchase 160 units at $7 each
27 Sale 100 units at $9 each
Chippewas uses the FIFO cost flow assumption. All purchases and sales are
on account.
Instructions

a. Assume Chippewas uses a periodic system. Prepare all necessary

 journal entries, including the end-of-month closing entry, to record cost
of goods sold. A physical count indicates that the ending inventory for
January is 110 units.
b. Compute gross profit using the periodic system.
c. Assume Chippewas uses a perpetual system. Prepare all necessary
journal entries.
d. Compute gross profit using the perpetual system.
E8.9 (LO3) (FIFO and Average-Cost Determination) LoBianco Company's
record of transactions for the month of April was as follows.
Purchases Sales
April 1 (balance on hand) 600 @ $6.00 April 3 500 @ $10.00
4 1,500 @ 6.08 9 1,300 @ 10.00
8 800 @ 6.40 11 600 @ 11.00
13 1,200 @ 6.50 23 1,200 @ 11.00
21 700 @ 6.60 27 900 @ 12.00
29 500 @ 6.79 4,500
5,300

Instructions

(Round unit price averages to four decimal places.)

a. Assuming that periodic inventory records are kept, compute the
inventory at April 30 using (1) FIFO and (2) average-cost.
b. Assuming that perpetual inventory records are kept in both units and
dollars, determine the inventory at April 30 using (1) FIFO and (2)
average-cost.
c. In an inflationary period, which inventory method—FIFO or average-
cost—will show the highest net income?
E8.10 (LO3) (FIFO and Average-Cost Inventory) Esplanade SA was formed
on December 1, 2018. The following information is available from
Esplanade's inventory records for Product BAP.
Units Unit Cost
January 1, 2019 (beginning inventory) 600 R$ 8.00
 Purchases:
January 5, 2019 1,100 9.00
January 25, 2019 1,300 10.00
February 16, 2019 800 11.00
March 26, 2019 600 12.00
A physical inventory on March 31, 2015, shows 1,500 units on hand.
Instructions

Assuming Esplanade uses a periodic system, prepare schedules to compute

the ending inventory at March 31, 2019, under each of the following inventory
methods (round to two decimal places).
a. Specific identification.
b. FIFO.
c. Weighted-average.
Under (a), 400 units from the beginning inventory are on hand and 1,100 units
from the January 5 purchase are on hand.
E8.11 (LO3) (Compute FIFO and Average-Cost—Periodic) The following
information is related to radios for the Couples Company for the month of
July.

Date Transaction Units Units Total Units Selling Total

In Cost Sold Price
July 1 Balance 100 $4.10 $
410
6 Purchase 800 4.30 3,440
7 Sale 300 $7.00 $ 2,100
10 Sale 300 7.30 2,190
12 Purchase 400 4.51 1,804
15 Sale 200 7.40 1,480
18 Purchase 300 4.60 1,380
22 Sale 400 7.40 2,960
25 Purchase 500 4.58 2,290
30 Sale 200 7.50 1,500
 b. Assuming that the perpetual inventory method is used and costs
are computed at the time of each withdrawal, what is the value of
the ending inventory at LIFO?
c. Assuming that the perpetual inventory method is used and costs
are computed at the time of each withdrawal, what is the gross
profit if the inventory is valued at FIFO?
d. Why is it stated that LIFO usually produces a lower gross profit
than FIFO?
*E8.18 (LO3, 5) (FIFO, LIFO, and Average-Cost Determination) Keyser
Company's record of transactions for the month of April is as follows.

Purchases Sales
April 1 (balance on hand) 600 @ $6.00 April 3 500 @ $10.00
4 1,500 @ 6.08 9 1,300 @ 10.00
8 800 @ 6.40 11 600 @ 11.00
13 1,200 @ 6.50 23 1,200 @ 11.00
21 700 @ 6.60 27 900 @ 12.00
29 500 @ 6.79 4,500
5,300

Instructions

a. Assuming that periodic inventory records are kept, compute the

inventory at April 30 using (1) LIFO and (2) average-cost.
b. Assuming that perpetual inventory records are kept in both units
and dollars, determine the inventory at April 30 using (1) FIFO and
(2) LIFO.
c. Compute cost of goods sold assuming periodic inventory
procedures and inventory priced at FIFO.
d. In an inflationary period, which inventory method—FIFO, LIFO, or
average-cost—will show the highest net income?
*E8.19 (LO3, 5) (FIFO, LIFO, Average-Cost Inventory) Mills Company
was formed on December 1, 2018. The following information is
available from Mills' inventory records for Product Zone.

Units Unit Cost

Instructions

Compute cost of goods sold, assuming Ehlo uses:

a. Periodic system, FIFO cost flow.
b. Perpetual system, FIFO cost flow.
c. Periodic system, weighted-average cost flow.
d. Perpetual system, moving-average cost flow.
*P8.7 (LO3, 5) (Compute FIFO, LIFO, and Average-Cost) Ronaldo
Company's record of transactions concerning part VF5 for the month of
September was as follows.

Purchases Sales
September 1 (balance on hand) 100 @ $5.00 September 5 300
4 400 @ 5.10 12 200
11 300 @ 5.30 27 800
18 200 @ 5.35 28 150
26 600 @ 5.60
30 200 @ 5.80
Instructions

a. Compute the inventory at September 30 on each of the following

bases. Assume that perpetual inventory records are kept in units
only. (Carry unit costs to the nearest cent.)
1. First-in, first-out (FIFO).
2. Average-cost.
3. Last-in, first-out (LIFO).
b. If the perpetual inventory record is kept in dollars, and costs are
computed at the time of each withdrawal, what amount would be
shown as ending inventory in 1 and 2 above? (Carry average unit
costs to four decimal places.)
*P8.8 (LO3, 5) (Compute FIFO, LIFO, and Average-Cost) Some of the
information found on a detail inventory card for Slatkin Inc. for the first
month of operations is as follows.