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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