Chapter 6 - Homework
Question 1.) Company made total purchases of $260,000 in the most current year. It paid freight
in of $3,500 on its purchases. Freight out, the cost to deliver the merchandise when it was sold
to Marshall's customers, totaled $7,500. Of the total purchases Marshall made during
the period, it returned $25,500 of the merchandise. Marshall took advantage of $2,800 of
purchase discounts offered by its vendors. What was Marshall's cost of inventory?
Marshall's cost of inventory is $235,200
Question 2.) Using the average-cost method, calculate the cost of ending inventory and cost of
goods sold for Sandy Corporation. (Round the average cost per unit to the nearest cent.)
Data Table
Quantity Unit Cost Total
Beginning inventory 90 $ 4.00 $ 360
Purchases 180 $ 7.00 $ 1,260
Goods available for sale 270
Ending inventory 80
Cost of goods sold 190
The cost of ending inventory is $480
The cost of goods sold is $1,140
Question 3.) Using the FIFO method, calculate the cost of ending inventory and cost of goods
sold for Sandy Corporation.
Data Table
Quantity Unit Cost Total
Beginning inventory 90 $ 4.00 $ 360
Purchases 180 $ 7.00 $ 1,260
Goods available for sale 270
Ending inventory 80
Cost of goods sold 190
The cost of ending inventory is $ 560
Part 2
The cost of goods sold is $ 1,060
Question 4.) Using the LIFO method, calculate the cost of ending inventory and cost of goods
sold for Sandy Corporation.
Data Table
Quantity Unit Cost Total
Beginning inventory 90 $ 4.00 $ 360
Purchases 180 $ 7.00 $ 1,260
Goods available for sale 270
Ending inventory 80
Cost of goods sold 190
The cost of ending inventory is $320
The cost of goods sold is $1,300
Question 5.) It is December 31, the end of the year, and the controller of Reed Corporation is
applying the lower-of-cost-or-market (LCM) rule to inventories. Before any year-end
adjustments, the company reports the following data:
Data Table
Cost of goods sold $ 450000
Historical cost of ending inventory, as
determined by a physical count
$ 66000
Question 6.) Fairbanks Company made sales of $24,600 million during 2021. Cost of goods sold for the
year totaled $9,840 million. At the end of 2020, Fairbanks' inventory stood at $1,000 million, and
Fairbanks ended 2021 with inventory of $1,400 million. Compute Fairbanks' gross profit percentage and
rate of inventory turnover for 2021.
Begin by computing Fairbanks's gross profit percentage for 2021. (Round your answer to the nearest
tenth of a percent, X.X%.)
Fairbanks's gross profit percentage for 2021 is 60 %
Now compute Fairbanks's rate of inventory turnover for 2021. (Round your answer to one
decimal place.)
Fairbanks's rate of inventory turnover for 2021 is 8.2 times.
Financial statement where item is
reported Balance to be reported
Inventory Balance Sheet $42,000
Cost of goods sold Income Statement $474,000
Powered by TCPDF (www.tcpdf.org)
