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3. Specific identification
Lot 3 6,000 120 720,000
4 9,000 100 900,000
15,000 1,620,000
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 10,000 52 520,000
7 30,000 50 1,500,000
17 60,000 45 2,700,000
22 20,000 43 860,000
Available for sale 120,000 5,580,000
FIFO Average
Goods available for sale 5,580,000 5,580,000
Less: Inventory – December 31 1,310,000 1,395,000
Cost of goods sold 4,270,000 4,185,000
Problem 7-20
The stock cards are not prepared anymore. The end results are simply given.
Average method
Ending inventory 4,000 252.50 1,010,000
Problem 7-21
Purchases Sales Inventory increment
2006 5,000 4,000 1,000
2007 9,000 7,000 2,000
2008 15,000 12,000 3,000
Total inventory – December 31, 2008 (units) 6,000
Sales 1,200,000
Cost of sales:
Inventory – December 31, 2007 (3,000 x 60) 180,000
Purchases 1,125,000
Goods available for sale 1,305,000
Less: Inventory – December 31, 2008 (6,000 x 75) 450,000 855,000
Gross income 345,000
95
Problem 7-22
Units Unit cost Total cost
FIFO
October 1 15,000 60 900,000
Problem 7-23
Units Unit cost Total cost
FIFO
October 1 purchase 300 10,000 3,000,000
96
Units Unit cost Total cost
Weighted average
January 1 200 7,500 1,500,000
April 5 300 9,000 2,700,000
October 1 500 10,000 5,000,000
Goods available for sale 1,000 9,200,000
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 Unit cost Total cost
July 12 1,000 60 60,000
25 14,000 62 868,000
FIFO inventory – July 31 15,000 928,000
Problem 7-25
97
Problem 7-26
Units Average unit cost Total cost
Problem 7-27
Average FIFO
Available for sale 1,753,500 1,753,500
Less: Ending inventory 584,500 596,000
Cost of sales 1,169,000 1,157,500
(Sch. 1) (Sch. 2)
98
Problem 7-28
2006 2007 2008
Cost of sales – Average 1,500,000 2,000,000 2,400,000
Understatement of ending inventory:
2006 ( 150,000) 150,000
2007 ( 200,000) 200,000
2008 _______ ________ ( 270,000)
Cost of sales – FIFO 1,350,000 1,950,000 2,330,000
Proof
Net income – Average 700,000 1,100,000 1,400,000
Understatement of ending inventory:
2006 150,000 ( 150,000)
2007 200,000 ( 200,000)
2008 _______ _____ 270,000
Net income – FIFO 850,000 1,150,000 1,470,000
Problem 7-29
Lower of
Units cost or NRV Inventory value
Materials:
R 1,000 100 100,000
S 2,000 250 500,000
T 3,000 300 900,000
Goods in process:
X 4,000 480 1,920,000
Y 5,000 620 3,100,000
Finished goods:
A 2,000 790 1,580,000
B 2,000 730 1,460,000
99
Problem 7-30
(Lower of cost or NRV)
Units Unit cost NRV Inventory value
A 1,000 120 150 120,000
B 1,500 110 120 165,000
C 1,200 150 140 168,000
D 1,800 140 160 252,000
E 1,700 130 160 221,000
926,000
Problem 7-31
Problem 7-32
Car accessories
C 600 1,400 2,000 840,000
D 800 2,100 2,000 1,600,000
Valuation at lower of cost or NRV 4,770,000
Problem 7-33
100
Problem 7-34
a. No adjustment is necessary because the market price is higher than the agreed 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.
e. Purchases 2,000,000
Estimated liability for purchase commitment 300,000
Accounts payable 2,000,000
Gain on purchase commitment 300,000
Problem 7-35
Problem 7-36
101
Problem 7-38
Problem 7-39
102
Problem 7-40
Requirement 1
2. To record the birth of one animal on July 1 with fair value of P70.
Biological assets 70
Cash 70
Requirement 2
103
104
105
Problem 7-57 Answer A
106
Problem 7-63 Answer C
Units Unit cost Total cost
January 1 8,000 200 1,600,000
8 ( 4,000) 200 ( 800,000)
4,000 200 800,000
20 12,000 240 2,880,000
(3,680,000/16,000 = 230) 16,000 230 3,680,000