# Quiz2 by xiaohuicaicai

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```									Problem 1:

Question 1: Weighted Average Flow Assumption and Periodic Inventory System

Journal Entries: Gross Method under The Periodic Inventory System:

Debit    Credit
Purchase cost of \$3,300, terms 2/10, net 30:
Purchases                                              3,300
Accounts Payable                                              3,300

Sale of \$6,250 on credit:
Accounts Receivable                                    6,250
Sales                                                         6,250

Invoices of \$3,300 are paid after discount period:
Accounts Payable                                       3,300
Cash                                                          3,300

Purchase cost of \$5,400, terms 2/10, net 30:
Purchases                                              5,400
Accounts Payable                                              5,400

Sale of \$7,500 on credit:
Accounts Receivable                                    7,500
Sales                                                         7,500

Invoices of \$5,400 are paid after discount period:
Accounts Payable                                       5,400
Cash                                                          5,400

Purchase cost of \$1,700, terms 2/10, net 30:
Purchases                                              1,700
Accounts Payable                                              1,700

Invoices of \$1,700 are paid within discount period:
Accounts Payable                                       1,700
Cash                                                          1,666
Purchase Discounts                                               34
General Ledger Accounts: Gross Method under The Periodic Inventory System:

Purchases                                 Purchase Discounts
\$3,300                                                   \$34
5,400                                                   \$34 (EB)
1,700
(EB) \$10,400

Inventory                                Cost of Goods Sold
Net CGA \$11,866                                           \$9,493
CGS   9,493                       (EB) \$9,493
(EB) \$2,373

Sales                                 \$13,750
Deduct: CGS                         -9,493
Gross Profit                           \$4,257

Weighted Average Cost Per Unit = Net CGA in \$ / Net CGA in Units
= [(BB)Invenotry + Net Purchases] / [(BB) Inventory Units + Net Purchases Unites]
= (1,500 + 10,400 - 34) / 700units
= \$16.95/unit
System:
Problem 1:

Question 2: Weighted Average Flow Assumption and Perpetual Inventory System

Journal Entries: Net Method under The Perpetual Inventory System:

Debit    Credit
Inventory cost of \$3,234, terms 2/10, net 30:
Inventory                                              3,234
Accounts Payable                                              3,234

Sale of \$6,250 on credit:
Accounts Receivable                                    6,250
Sales                                                         6,250

Record cost of goods sold of \$3,945:
Cost of Goods Sold                                     3,945
Invenotry                                                     3,945
(1500+3234)/300=\$15.78/unit

Invoices of \$3,300 are paid after discount period:
Accounts Payable                                       3,234
Purchase Discount Loss                                    66
Cash                                                          3,300

Inventory cost of \$5,292, terms 2/10, net 30:
Invenotry                                              5,292
Accounts Payable                                              5,292

Sale of \$7,500 on credit:
Accounts Receivable                                    7,500
Sales                                                         7,500

Record cost of goods sold of \$5,212:
Cost of Goods Sold                                     5,212
Invenotry                                                     5,212
(1500+3234-3945+5292)/350=\$17.37/unit

Invoices of \$5,400 are paid after discount period:
Accounts Payable                                       5,292
Purchase Discount Loss                                   108
Cash                                                          5,400

Inventory cost of \$1,666, terms 2/10, net 30:
Inventory                                              1,666
Accounts Payable                                              1,666

Invoices of \$1,666 are paid within discount period:
Accounts Payable                                       1,666
Cash                                                          1,666
To Adjust the ending inventory to its balance per
physical count:
Inventory Shrinkage                                 169
Inventory                                              169
(1500+3234-3945=5292-5212+1666)/150=\$16.90unit
al Inventory System
General Ledger Accounts: Net Method under The Perpetual Inventory System:

Inventory                              Cost of Goods Sold
(BB) \$1,500                                        \$3,945
3,234                                         5,212
\$3,945                         (EB) \$9,157
5,292
5,212
1,666
169 Inventory Shrinkage
(EB) \$2,366

Sales                                   \$13,750
Deduct: CGS                           -9,157
Gross Profit                             \$4,593

Weighted Moving Average Cost Per Unit = Net CGA in \$ / Net CGA in Units
Problem 2:

Journal Entries: To Record the Adjusting Entries to Recognize the Loss (Recovery) Due to Market
Decline in Inventory:

Debit     Credit

To recover inventory from write down to market:
Allowance to Reduce Inventory to Market               90,000
Recovery Due to Market Incline of Inventory                 90,000

To write down inventory to market:
Loss Due to Market Decline of Inventory              130,000
Allowance to Reduce Inventory to Market                     130,000

To recover inventory from write down to market:
Allowance to Reduce Inventory to Market               30,000
Recovery Due to Market Incline of Inventory                 30,000

To write down inventory to market:
Loss Due to Market Decline of Inventory              120,000
Allowance to Reduce Inventory to Market                     120,000
General Ledger Account: Allowance to Reduce Inventory to Market:

Allowance to Reduce Inventory to Market
\$90,000 (BB)
Recovery \$90,000
\$0 (EB) 2001 & (BB) 2002
130000 Loss
\$130,000 (EB) 2002 & (BB) 2003
Recovery \$30,000
\$100,000 (EB) 2003 & (BB) 2004
120,000 Loss
\$220,000 (EB) 2004

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