ACC111 Unit 6 Homework Assignment

E7-2 Determining the Correct Inventory Balance [LO 7-1, LO 7-2, LO 7-4]

Seemore Lens Company (SLC) sells contact lenses FOB destination. For the year ended December 31, the company reported Inventory of $78,000 and Cost of Goods Sold of $436,000.

  1. Included in Inventory (and Accounts Payable) are $11,600 of lenses SLC is holding on consignment.
  2. Included in SLC’s Inventory balance are $5,800 of office supplies held in SLC’s warehouse.
  3. Excluded from SLC’s Inventory balance are $8,800 of lenses in the warehouse, ready to send to customers on January 2. SLC reported these lenses as sold on December 31, at a price of $16,600.
  4. Included in SLC’s Inventory balance are $3,400 of lenses that were damaged in December and will be scrapped in January, with zero realizable value.

Required:

Prepare the table showing the balances presently reported for Inventory and Cost of Goods Sold, and then displaying the adjustment(s) needed to correctly account for each of items (a)-(d), and finally determining the appropriate Inventory and Cost of Goods Sold balances. (Enter any decreases to account balances with a minus sign.)

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E7-3 Recording Journal Entries to Correct Inventory Misreporting [LO 7-1, LO 7-2, LO 7-4]

Seemore Lens Company (SLC) sells contact lenses FOB destination. For the year ended December 31, the company reported Inventory of $72,000 and Cost of Goods Sold of $424,000.

  1. Included in Inventory (and Accounts Payable) are $10,400 of lenses SLC is holding on consignment.
  2. Included in SLC’s Inventory balance are $5,200 of office supplies held in SLC’s warehouse.
  3. Excluded from SLC’s Inventory balance are $8,200 of lenses in the warehouse, ready to send to customers on January 2. SLC reported these lenses as sold on December 31, at a price of $15,400.
  4. Included in SLC’s Inventory balance are $3,100 of lenses that were damaged in December and will be scrapped in January, with zero realizable value.

Required:

For each item, (a)-(d), prepare the journal entry to correct the balances presently reported. (If no entry is required for a transaction/event, select “No Journal Entry Required” in the first account field.)

E7-5 Calculating Cost of Ending Inventory and Cost of Goods Sold under Periodic FIFO, LIFO, and Weighted Average Cost [LO 7-3]

Oahu Kiki tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each month, as if it uses a periodic inventory system. Assume Oahu Kiki’s records show the following for the month of January. Sales totaled 300 units.

Date Units Unit Cost Total Cost
Beginning Inventory January 1 220 $ 80 $ 17,600
Purchase January 15 310 90 27,900
Purchase January 24 270 110 29,700

Required:

  1. Calculate the number and cost of goods available for sale.
  2. Calculate the number of units in ending inventory.
  3. Calculate the cost of ending inventory and cost of goods sold using the (a) FIFO, (b) LIFO, and (c) weighted average cost methods.

Course: ACC111 Financial Accounting
School: Post University

  • 06/10/2019
  • 100
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