2013w Ch8 Work Sheets (Blank)

7/29/2019 2013w Ch8 Work Sheets (Blank)

1/15

LCM BE8-11-Class

BE8-11

Item Cost

Estimated

Selling Price

EstimatedDisposal

Costs NRV LCM

Jokers $1,820 2100 100

Kings 5000 4900 100

Queens 4290 4625 200

Jacks 3,200 4210 100


2/15

BE8-12

BE8-12

2009 2010 2011

Cost 55,600 68,700 60,000

NRV 54,000 61,625 60,900

a) DIRECT METHOD

Ending Inventory

Loss (if any) is charged to CGS

31-Dec-09

Dr. COGS

Cr. Inventory

31-Dec-10

Dr. COGS

Cr. Inventory

31-Dec-11

No entry

b) INDIRECT METHOD

Balance of "Inventory" account

-) Balance of "Allowance" account (Cr.) (plug)

Ending Inventory reported on B/S

Loss accrued during the year (plug)

31-Dec-09

Dr. Loss due to decline in NRV of inventory


3/15

BE8-12

INDIRECT METHOD

Calculate Balances in T accounts

Inventory

Allowance


4/15

E8-8 - error 1

Scenario 1: Ending inventory is overstated by $1,020, but purchases are recorded correctly.

Current year Next year

Beginning Inventory

+PURCHASES No error=GOODS AVAILABLE

Less: Ending Inventory overstated by $1,020

= COGS

Net Income

Opening Retained Earnings

Ending Retained Earnings

InventoryAccounts payable

Solution

Working capital: Current Assets - Current liabilities

Current ration: current assets / current liabilities

Retained earnings

Net income

If you adjusted for the error in current year

Dr. COGS

Cr. Inventory

If you adjust for the error next year

Dr. Retained earnings

Cr. COGS


5/15

E8-8 error 2


Beginning Inventory+PURCHASES understated by $1,500 overstated by $1,500

=GOODS AVAILABLE

Less: Ending Inventory understated by $1,500

= COGS

Net Income



InventoryAccounts payable

Solution


Current ratio: current assets / current liabilities (assuming the ratio >1)1

Retained earnings

Net income


Dr. Inventory

Cr. Accounts Payable


fully disclose a description of the error.

financial statement comparative figures would need adjustment for inventory increased by $1,500 and increase a/p by $1,500

Scenario 2: Both ending inventory and a purchase on account are understated by the same amount. (Assume this purchase of

$1,500 was recorded in the following year)


6/15

E8-8 - error 3


Beginning Inventory

+PURCHASES

=GOODS AVAILABLE

Less: Ending Inventory no error

= COGS

Net Income



InventoryAccounts Payable

Solution


Current ratio: current assets / current liabilities

(assuming the ratio >1)1

Retained earningsNet income


Dr. COGS



Dr. Retained Earnings

Cr. Accounts payable

Scenario 3: Ending inventory is correct, but a purchase on account was recorded. (Assume this purchase of

$850 was recorded in the following year)


7/15

E8-8 (2) - class - error 2


Beginning Inventory

+PURCHASES

=GOODS AVAILABLE

Less: Ending Inventory

= COGS

Net Income

Opening Retained EarningsEnding Retained Earnings

Inventory

Accounts payable


Dr. Inventory



Both ending inventory and a purchase on account are understated by the same amount. (Assume

this purchase of $1,500 was recorded in the following year)


8/15

LCM BE8-11

BE8-11

Item Cost

Estimated

Selling Price

Estimated

Disposal

Costs NRV LCM

Jokers $1,820 2100 100 2000 $1,820

Kings 5000 4900 100 4800 4800

Queens 4290 4625 200 4425 4290

Jacks 3,200 4210 100 4110 3,200

$14,310 $15,335 $14,110

Can this be done a total basis?


9/15

BE8-12 - Class

BE8-12

2009 2010

Cost 55,600 68,700

NRV 54,000 61,625

a) DIRECT METHOD

31-Dec-10

INDIRECT METHOD

31-Dec-10

b) 2009 2010 2011

Cost 55,600 68,700 60,000

NRV 68,700 61,625 60,900

Direct method

Indirect method

periodic method

direct:

31-Dec-10


10/15

E8-8 - class - error 1

Both ending inventory is overstated by $1,020, but purchases are recorded correctly.


Beginning Inventory

+PURCHASES

=GOODS AVAILABLE


= COGS

Net Income



Inventory

Accounts payable




11/15

E8-8 (3) - class - error 3

Current year Next yearBeginning Inventory

+PURCHASES

=GOODS AVAILABLE


= COGS

Net Income



Inventory


Dr. COGS


If you adjust for the error next yearDr. Retained Earnings

Cr. Accounts payable

Ending inventory is correct, but a purchase on account was recorded. (Assume this purcha

$850 was recorded in the following year)


12/15

E8-20 - class

E8-20

per litre

Non-cancellable purchase commitment for 45,500 litres of raw material $3.25

Situation 1: Market price on December 31, 2010 $3.55


Situation 1:

Situation 2:

Part d) J/E on Jan 15, 2011 if Situation 2 existed at December 31st. At market price on Jan 15 is still 2.60


13/15

E8-20

E8-20

per litre

Non-cancellable purchase commitment for 45,500 litres of raw material $3.25



Situation 1:

No J/E - just disclose the commitment

Situation 2:

Loss on purchase Contracts 29,575 (3.25-2.60)*45,500

Accrued Liability on purchase contracts 29575

Part d) J/E on Jan 15, 2011 if Situation 2 existed at December 31st and market price is still 2.60

Raw materials 118300

Accrued liability on purchase contracts 29,575

Accounts payable 147,875 (=3.25x45,500)


14/15

E8-21- class

E8-21

Part a) Part b)

Inventory Inventory

Purchases Purchases

Less Purchase discounts Less Purchase discountsFreight-in Freight-in

=GAFS 0 =GAFS

Less COGS Less COGS

= Ending inventory 0 = Ending inventory

Sales Sales

Less: Sales returns Less: Sales returnsNet sales 0 Net sales

Gross profit (25% of sales Gross profit = Sales less cost

COGS is sales less Gross profit GP = 1,130,000 less 1,130,000/1.25

Cost of goods sold


15/15

E8-21

E8-21

Part a) Part b)

Inventory 360,000 Inventory 360,000

Purchases 700000 Purchases 700000

Less Purchase discounts -12,000 Less Purchase discounts -12,000

Freight-in 50,000 Freight-in 50,000=GAFS 1,098,000 =GAFS 1,098,000

Less COGS 847,500 Less COGS 904,000

= Ending inventory 250,500 = Ending inventory 194,000

Sales 1,200,000 Sales 1,200,000

Less: Sales returns -70,000 Less: Sales returns -70,000

Net sales 1,130,000 Net sales 1,130,000

Gross profit (25% of sales 282500 Gross profit = Sales less cost

COGS is sales less Gross profit 847,500 GP = 1,130,000 less 1,130,000/1.25 226,000 see calc below

Cost of goods sold 904,000

SOLVE FOR COST

Selling price = Cost + Cost* 25%

1,130,000 = Cost(1.25)

1130000/1.25 = Cost

Cost = 904000

2013w Ch8 Work Sheets (Blank)

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