Answers to Matching
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Answers to BRIEF EXERCISES
1.
1)
2)
3)
4)
Included
Excluded
Excluded
Excluded
2.
1) FIFO
300 × $8 = $2,400
2) Average-cost
200 × $6 = $1,200 Average-cost / unit: $6,500 ÷ 900 = $7.22
300 × $7 = 2,100
$7.22 × 300 = $2,166
400 × $8 = 3,200
900
$6,500
3.
€12,000
+28,000
€40,000
–10,500
€29,500
Beginning inventory
Net purchases (€30,000 – €2,000)
Goods available for sale
Ending inventory
Cost of goods sold
4.
Ending inventory of 200 units:
200 x $3.70 = $740
Cost of goods sold:
Units available for sale (100 + 450 + 300) = 850
Units sold 850 – 200 = 650
100 × $3 =
450 × $3.50 =
100 × $3.70 =
Cost of goods sold
$
300
1,575
370
$2,245
5.
Inventory Categories
Camera
Camcorders
DVDs
Cost Data
¥11,000
8,000
14,000
Market Data
¥10,200
8,500
12,000
Lower-of-costor-net realizable value
¥10,200
8,000
12,000
¥30,200
6.
(1) If ending inventory is understated by $7,000, the cost of goods sold will be overstated and
net income will be understated by $7,000. The correct net income is $127,000.
(2) On the statement of financial position, both inventory and equity will be understated by
$7,000.
7.
Inventory Turnover Ratio =
$198,000 ÷ [($21,400 + $22,600) ÷ 2] = 9 times
Days in Inventory = 365 ÷ 9 = 40.6 days