Problem 6-2B (40 minutes) July 3 Merchandise Inventory... 15,000 Accounts Payable CMP Corp.... 15,000 Purchased goods on credit. 4 Accounts Payable CMP Corp.... 250 Cash... 250 Paid freight for supplier. 7 Accounts Receivable Harbison Co.... Sales... 10,500 10,500 Sold goods on credit. 7 of Goods Sold.... 7,500 Merchandise Inventory... 7,500 To record the cost of the July 7 sale. 10 Merchandise Inventory... Accounts Payable Cimarron Corporation 13,850 13,850 Purchased goods on credit. 11 Delivery Expense... 300 Cash... 300 Paid shipping charges on July 7 sale. 12 Sales Returns and Allowances... 1,750 Accounts Receivable Harbison Co.... 1,750 Customer returned merchandise. 12 Merchandise Inventory... 1,250 of Goods Sold... 1,250 Returned goods to inventory. 14 Accounts Payable Cimarron Corporation... 2,000 Merchandise Inventory... 2,000 Received a credit memorandum for July 10 purchase. 17 Cash... 8,575 Sales Discounts... 175 Accounts Receivable Harbison Co.... 8,750 Collected receivable within the 2% discount period. Solutions Manual for Chapter 7 1
Problem 6-2B (concluded) July 18 Cash... 15,000 Land... 15,000 Sold land at cost. 19 Van... 18,000 Cash... 5,000 Notes Payable... 13,000 To record purchase of van. 20 Accounts Payable Cimarron Corporation... 11,850 Merchandise Inventory... 112.50 Cash... 11,737.50 Paid payable within the discount period; $13,250 + $600 $2,000 = $11,850; ($13,250 $2,000) 1%* = $112.50. 21 Accounts Receivable Hess... 9,000 Sales... 9,000 Sold goods on credit. 21 of Goods Sold.... 6,250 Merchandise Inventory... 6,250 To record the cost of the July 21 sale. 24 Sales Returns and Allowances... 1,500 Accounts Receivable Hess... 1,500 Issued credit memo. 31 Cash... 7,425 Sales Discounts... 75 Accounts Receivable Hess... 7,500 Collected receivable within the 1% discount period. 31 Accounts Payable CMP Corp.... 14,750 Cash... 14,750 Paid payable. * Note that the discount applies to the merchandise inventory purchased and not to the shipping charges 2 Fundamental Accounting Principles, Thirteenth Canadian Edition
Problem 7-1B (40 minutes) 1) (a) FIFO perpetual Date Purchases Sales (at cost) Inventory Balance Jan. of Goods Sold s s s 1 Beginning inventory 600 @ $110.00 = $ 66,000 600 @ $110.00 = $ 66,000 600 @ $110.00 = $ 66,000 Feb. 13 200 @ $114.00 = $ 22,800 200 @ 114.00 = 22,800 15 300 @ $110.00 = $ 33,000 300 @ $110.00 = $ 33,000 200 @ 114.00 = 22,800 300 @ $110.00 = $ 33,000 200 @ 114.00 = 22,800 Aug. 5 345 @ $118.00 = $ 40,710 345 @ 118.00 = 40,710 10 300 @ $110.00 = $ 33,000 165 @ 114.00 = 18,810 35 @ 114.00 = 3,990 345 @ 118.00 = 40,710 1,145 $129,510 635 $69,990 510 $59,520 of goods available for sale = of goods sold + Ending inventory Solutions Manual for Chapter 7 3
Problem 7-1B (continued) 1) (b) Moving weighted-average perpetual Inventory Balance Date Purchases Sales (at cost) (a) (b) (a) (b) of Goods Sold Average / s s s Beginning inventory Jan. 1 600 @ $110.00 = $ 66,000.00 600 $110.00 $ 66,000.00 Inventory Balance Calculations 600 $66,000.00 Feb. 13 200 @ $114.00 = $ 22,800.00 200 @ 114.00 = 22,800.00 800 $111.00 $ 88,800.00 800 $88,800.00 800 $88,800.00 15 300 @ $111.00 = $ 33,300.00 300 @ 111.00 = -33,300.00 500 $111.00 $ 55,500.00 500 $55,500.00 500 $55,500.00 Aug. 5 345 @ $118.00 = $ 40,710.00 345 @ 118.00 = 40,710.00 845 $113.86 $ 96,210.00 845 $96,210.00 845 $96,210.00 10 335 @ $113.86 = $ 38,143.10 335 @ 113.86 = -38,143.10 510 $113.86 $ 58,066.90 510 $58,066.90 1,145 $129,510.00 635 $71,443.10 510 $58,066.90 of goods available for sale = of goods sold + Ending inventory
Problem 7-1B (continued) 2) Specific identification Date Purchases Sales (at cost) Inventory Balance Jan. 1 of Goods Sold s s s Beginning inventory 600 @ $110.00 = $ 66,000 600 @ $110.00 = $ 66,000 600 @ $110.00 = $ 66,000 Feb. 13 200 @ $114.00 = $ 22,800 200 @ 114.00 = 22,800 15 175 @ $110.00 = $ 19,250 425 @ $110.00 = $ 46,750 125 @ 114.00 = 14,250 75 @ 114.00 = 8,550 425 @ $110.00 = $ 46,750 75 @ 114.00 = 8,550 Aug. 5 345 @ $118.00 = $ 40,710 345 @ 118.00 = 40,710 10 15 @ $110.00 = $ 1,650 410 @ $110.00 = $ 45,100 320 @ 118.00 = 37,760 75 @ 114.00 = 8,550 25 @ 118.00 = 2,950 1,145 $129,510 635 $72,910 510 $56,600 of goods available for sale = of goods sold + Ending inventory 3) a. b. c. Moving Weighted Specific FIFO Average Identification Feb. 15 Accounts Receivable... 54,000 54,000 54,000 Sales... 54,000 54,000 54,000 To record a credit sale; $180/unit x 300 units = $54,000. 15 of Goods Sold... 33,000 33,300 33,500 Merchandise Inventory... 33,000 33,300 33,500 To record the sale of merchandise. Aug. 5 Merchandise Inventory... 40,710 40,710 40,710 Accounts Payable... 40,710 40,710 40,710 To record the purchase of inventory on credit. Copyright 2010by McGraw-Hill Ryerson Limited. All rights reserved. Solutions Manual for Chapter 7 5
Problem 7-8B (30 minutes) 1) Incorrect Income Statement Information For Years Ended December 31 Corrected Income Statement Information For Years Ended December 31 2011 % 2012 % 2011 % 2012 % Sales... $675,000 100 $845,000 100 $675,000 100 $845,000 100 of goods sold 405,000 60 422,500 50 367,500* 54 468,500** 55 Gross profit... $ 270,000 40 $ 422,500 50 $ 307,500 46 $ 376,500 45 * $405,000 $37,500 = $367,500 ** $422,500 + $37,500 $16,000 + $24,500 = $468,500 2) The gross profit information now reflects the increased cost of goods sold of which the owner was aware. Problem 7-9B (50 minutes) Part 1 Per s on Hand NRV applied to: a. Major Category b. Separately to Each Product Inventory Items NRV NRV Office furniture: Desks 436 $261 $305 $113,796 $132,980 $113,796 Credenzas 295 227 256 66,965 75,520 66,965 Chairs 587 49 43 28,763 25,241 25,241 Bookshelves 321 93 82 29,853 26,322 26,322 Subtotals $239,377 $260,063 $239,377 Filing cabinets: Two-drawer 214 81 70 $ 17,334 $ 14,980 14,980 Four-drawer 398 135 122 53,730 48,556 48,556 Lateral 175 104 118 18,200 20,650 18,200 Subtotals $ 89,264 $ 84,186 84,186 Office Equip.: Fax machines 430 168 200 $ 72,240 $ 86,000 72,240 Copiers 545 317 288 172,765 156,960 156,960 Typewriters 352 125 117 44,000 41,184 41,184 Subtotals $289,005 $284,144 284,144 s $617,646 $628,393 $607,707 $584,444 6 Fundamental Accounting Principles, Thirteenth Canadian Edition
Problem 7-9B (concluded) 2a. Dec. 31 of Goods Sold... 9,939 Merchandise Inventory... 9,939 To write inventory down to NRV; 617,646 607,707 = 9,939 2b. Dec. 31 of Goods Sold... 33,202 Merchandise Inventory... 33,202 To write inventory down to NRV; 617,646 584,444 = 33,202 Solutions Manual for Chapter 7 7