Assignment 202 20Dr

Topics: Inventory, FIFO and LIFO accounting, Average Pages: 4 (531 words) Published: March 10, 2015
Accounting II
Assignment 2 Dr. Medhat El Guindy

FMI

Copy 2015

Adapted by

Dr. Heba Wahba
CPA — CIA — CMA
01114364363
1

Dr. Heba Wahba

EXERCISE 6-8
(a)

Cost of Goods
Available for Sale
$5,500

÷

Total Units
Available for Sale
900

Ending inventory (100 X $6.11)
Cost of goods sold (800 X $6.11)

Weighted Average
Unit Cost
$6.11

=

$ 611
4,889

(b) Ending inventory is lower than FIFO ($700) and higher than LIFO ($500). In contrast, cost of goods sold is higher than FIFO ($4,800) and lower than LIFO ($5,000).
(c) The average-cost method uses a weighted-average unit cost, not a simple average of unit costs.

EXERCISE 6-9
Cost
Cameras
Minolta
Canon
Total
Light meters
Vivitar
Kodak
Total
Total inventory

$

Market

850
900
1,750

1,500
1,680
3,180
$4,930

$

780
912
1,692

1,380
1,890
3,270
$4,962

Lower
-of-Cost
-or-Market:
$

780
900

1,380
1,680
$4,740

EXERCISE 6-14
(a)
Inventory Turnover

Days in Inventory
(b)

Alpha Company

Omega Company

$190,000
($45,000 + $55,000)/2
= 3.80

$292,000
($71,000 +
$69,000)/2
= 4.17

365/3.80 = 96 days

365/4.17 = 88 days

Omega Company is moving its inventory more quickly, since its inventory turnover is higher, and its days in inventory is lower.

2

Dr. Heba Wahba

EXERCISE 6-16
(a)

The cost of goods available for sale is:
June 1 Inventory
June 12 Purchase
June 23 Purchase
Total cost of goods available

200 @ $5
400 @ $6
300 @ $7
for sale

$1,000
2,400
2,100
$5,500

FIFO
Date
June 1
June 12

Purchases
(400 @ $6)
$2,400

June 15

June 23

Cost of Goods Sold

(200 @ $5)
(240 @ $6)

$1,000
1,440

(160 @ $6)
(200 @ $7)

960
1,400
$4,800

(300 @ $7) $2,100

June 27

Balance
(200 @ $5)
$1,000
(200 @ $5)
} $3,400
(400 @ $6)
(160 @ $6)
$ 960
(160 @ $6)
$3,060
(300 @ $7) }

(100 @ $7)

$

700

Ending inventory: $700. Cost of goods sold:...
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