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Wednesday, August 11, 2010

Valix Finacc vol 1 Problem 8-21 to 30

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 8-21 to 30



Problem 8-21  Answer  A


Raw materials – January 1                                                                                       300,000
Purchases                                                                                      1,000,000
Freight in                                                                                           100,000          1,100,000
Raw materials available for use                                                                           1,400,000
Less: Raw Materials – December 31                                                                         600,000
Raw materials used                                                                                                  800,000
Direct labor                                                                                                              800,000
Manufacturing overhead (50% x 800,000)                                                                 400,000
Total manufacturing cost                                                                                      2,000,000
Add: Goods in process – January 1                                                                       1,000,000
Total goods in process                                                                                                      3,000,000
Less: Goods in process – December 31 (squeeze)                                                 1,300,000
Cost of goods manufactured                                                                               1,700,000
Add: Finished goods – January 1                                                                           1,400,000
Goods available for sale                                                                                       3,100,000
Less: Finished goods _ December 31                                                                     1,000,000 
Cost of sales (70% x 3,000,000)                                                                               2,100,000         

The amount of goods in process on December 31is computed as simply working back.

Problem 8-22 

Requirement  a


                                                Physical inventory       Purchases up to        Purchases up to

                                                     May 31, 2008          May 31, 2008              June 30, 2008

Balances                                             950,000                   6,750,000                    8,000,000

      1                                                       -                              75,000                           -
      2                                                       -                       (      10,000)                (      15,000)
      3                                                       -                       (      20,000)               (      20,000)
      4                                                (   55,000)                (      55,000)                           -_ __
Adjusted                                             895,000                  6,740,000                    7,965,000

Inventory – July 1, 2007                                                                                          875,000
Purchases up to May 31, 2008                                                                             6,740,000
Goods available for sale                                                                                    7,615,000
Less: Inventory – May 31, 2008                                                                                895,000
Cost of sales                                                                                                       6,720,000

Sales up to May 31, 2008                                                                                     8,400,000
Cost of sales                                                                                                       6,720,000
Gross profit                                                                                                         1,680,000

Rate (1,680,000/8,400,000)                                                                                           20%

 

Requirement b


Sales for year ended June 30, 2008                                                                     9,600,000
Less: Sales for 11 months ended May 31, 2008                                        8,400,000
Sales for June                                                                                                      1,200,000
                                                                                                             113


Cost of goods sold with profit (1,100,000 x 80%)                                                         880,000
Cost of goods sold without profit                                                                               100,000
Cost of goods sold during June 2008                                                                          980,000


Requirement c


Inventory, July 1, 2007                                                                                                  875,000
Purchases for year ended June 30, 2008 (as adjusted)                                              7,965,000
Goods available for sale                                                                                           8,840,000
Less: Cost of goods sold   
              Sales with profit (9,500,000 x 80%)                                       7,600,000
              Sales without profit                                                               100,000           7,700,000
Inventory, June 30, 2008                                                                                            1,140,000


Problem 8-23

1. Accounts receivable – April 30                                                                             1,040,000
    Writeoff                                                                                                                    60,000
    Collections (440,000 – 20,000)                                                                                  420,000
    Total                                                                                                                                 1,520,000
    Less: Accounts receivable – March 31                                                                     920,000
    Sales for April                                                                                                           600,000
    Sales up to March 31                                                                                            3,600,000
    Total sales                                                                                                             4,200,000

2. Accounts payable – April 30 for April shipments                                                      340,000
    Payment for April merchandise shipments                                                                80,000
    Purchases of April                                                                                                    420,000
    Purchases up to March 31                                                                                    1,680,000
    Total purchases                                                                                                    2,100,000

3. Inventory – January 1                                                                                            1,880,000
    Purchases                                                                                  2,100,000
    Less: Purchases return                                                                     20,000           2,080,000
    Goods available for sale                                                                                     3,960,000
    Less: Cost of sales (4,200,000 x 60%)                                                                     2,520,000
    Inventory – April 30                                                                                              1,440,000
    Less: Goods in transit                                                                   100,000
             Salvage value                                                                                140,000                240,000
    Fire loss                                                                                                                1,200,000

 







                                                                                                            114

Problem 8-24  Answer  B                                  

 

                                                                                                       Cost                    Retail    

Inventory – January 1                                                                     280,000                700,000      
Purchases                                                                                    2,480,000             5,160,000    
Freight in                                                                                           75,000                     
Markup                                                                                                                      500,000              
Markup cancellation                                                                   __ __ __ _           (    60,000)      
GAS                                                                                              2,835,000             6,300,000

Cost ratio (2,835/6,300)                                               45%                                              

Markdown                                                                                                            (   250,000)   
Markdown cancellation                                                             _     __   _                 50,000          
GAS – Average                                                                           2,835,000             6,100,000        

Sales                                                                                                                    (5,000,000)    
Shrinkage (2% x 5,000,000)                                                                                   (   100,000)     
Inventory – December 31                                                                                     1,000,000

Conservative cost (1,000,000 x 45%)                                             450,000

The “approximate lower of average cost or market” retail is the same as the conservative or conventional retail.


Problem 8-25  Answer  C

 

                                                                                                     Cost                              Retail

Inventory – January 1                                                                   720,000             1,000,000 
Purchases                                                                                  4,080,000             6,300,000
Markup                                                                                                                    700,000
Markdown                                                                                  __  _____          (    500,000)         
GAS                                                                                            4,800,000             7,500,000   

Cost ratio (4,800/7,500)                                               64%

Sales                                                                                                                   (5,900,000)
Shoplifting losses                                                                                                 (   100,000)    
Inventory                                                                                                             1,500,000

Average cost (1,500,000 x 64%)                                                     960,000


 





                                                                                                             115

Problem 8-26  Answer  D                                Problem 8-27  Answer  A

 

                                       Cost           Retail                                                 Cost          Retail        
Beginning inventory                                             Beginning inventory        600,000    1,500,000 
    and purchases         6,000,000    9,200,000        Purchases                    3,000,000    5,500,000
Net markup                 ________       400,000        Net markups                                    500,000
GAS                              6,000,000    9,600,000        Net markdown            __  _____   (1,000,000)   
                                                                            Net purchases             3,000,000    5,000,000
Cost ratio                                                                          
  (6,000/9,600) = 62.5%                                          Cost ratio
                                                                               (3,000/5,000) = 60%
Sales                                             (7,800,000)           
Net markdown                             (   600,000)      GAS                             3,600,000     6,500,000
Ending inventory                           1,200,000        Sales                                                          (4,500,000)
                                                                            Ending inventory                            2,000,000
Conservative cost
   (1,200,000 x 62.5%)       750,000                          FIFO cost
                                                                               (2,000,000 x 60%)      1,200,000
Goods available for sale               6,000,000
Less: Ending inventory                      750,000
Cost of sales                                  5,250,000      

Problem 8-28  Answer  A                              

                                                                                                            Cost                 Retail                                                                                                                                                                                                                           

Inventory – January 1                                                                     1,200,000            1,800,000     
Purchases                                                                                       5,600,000            7,200,000                             
Freight in                                                                                            400,000
Net markup                                                                                                              1,400,000     
Net markdown                                                                                ________          (    600,000)        
Net purchases (6,000/8,000)                                          75%            6,000,000            8,000,000
Goods available for sale                                                                7,200,000            9,800,000
Sales                                                                                                                        (7,600,000)
Inventory – December 31                                                                                         2,200,000

                                                                                                                                                                                                                                                                                                           FIFO cost (2,200,000 x 75%)                                                             1,650,000


Goods available for sale                                                                                         7,200,000
Less: Inventory – December 31                                                                                1,650,000
Cost of goods sold                                                                                                  5,550,000 

Problem 8-29  Answer  C

                                                                                                            Cost                Retail 

Available for sale                                                                           4,900,000           7,000,000

Markdown                                                                                                              (   100,000)

Sales                                                                                                                       (5,500,000)
Inventory, December 31                                                                                         1,400,000                       

Average cost (1,400,000 x 71%)                                                         994,000

 

Cost ratio (4,900,000 / 6,900,000)                                 71%

                                                                                                             116

Problem 8-30 


                                                                                                          Cost                 Retail

Inventory, January 1                                                                          500,000             770,000
Purchases                                                                                       3,070,000          4,300,000
Transportation in                                                                                70,000
Purchases return                                                                            (     25,000)      (     40,000)
Purchase discount                                                                         (     45,000)
Markup                                                                                                                       100,000
Cancelation of markup                                                                 ________          (     30,000)
Goods available for sale – conservative                                      3,570,000           5,100,000
        Cost ratio – conservative (357/510)                     70%
Markdown                                                                                                              (   350,000)
Cancelation of markdown                                                           ________                  10,000
Goods available for sale – average cost                                     3,570,000           4,760,000

        Cost ratio – average cost (357/476)                    75%
Less: Sales                                                                                     4,000,000
        Sales return                                                                          (      80,000)          3,920,000
Inventory, December 31 at selling price                                                                     840,000

Conservative cost (840,000 x 70%)                                                  588,000
Average cost         (840,000 x 75%)                                                 630,000

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