44K06.
1

Financial Accounting 1 –
ACC2001
CHAPTER ASSIGNMENT
(Chapter 3)

Questions
Complex 

Moderate 

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questions that
you did answer?
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that you are not
able to answer.

Simple 

_24__/24

Brief Exercises
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exercises that

you did answer?
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exercises that
you are not able
to answer.

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Exercises
Complex 

Moderate 

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exercises that
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E6-3

Problems & Critical Thinking
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_5__/6
© 2020 by Dr. Nguyen Huu Cuong

Simple 

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problems that
you did answer?
List the problems
that you are not
able to answer.

P6-7A

Student Information
Full Name Ngơ Thị Lan Dung
Class
44k06.1
Phone
0372532471
Email

Self-evaluation
(Out of ten)


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9.3/10

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44K06.
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Financial Accounting 1 –
ACC2001
CHAPTER ASSIGNMENT
(Chapter 3)

QUESTIONS
Financial Accounting: Tools for Decision-Making, 7th Canadian Edition (Kimmel P.D. et
al., 2017):‌
Chapter 6 "Reporting and Analyzing Inventory"

Q2:
A‌consignment‌always‌has‌a‌consignor‌and‌a‌consignee‌in‌the‌document‌written‌out‌by‌the‌
carrier‌or‌the‌transporter.
The‌consignor‌is‌the‌sender‌of‌a‌consignment‌while‌the‌consignee‌is‌the‌receiver‌of‌the‌
consignment.
Q3:
Janine’s‌December‌31‌inventory‌decreased

Fastrak’s‌December‌31‌inventory‌increased‌(‌inscreasing‌goods‌in‌transit)
The‌journal‌entry‌in‌the‌books‌of‌Jannie.Ltd‌will‌be‌Accounts‌receivable‌debit‌and‌Sales‌credit.‌
The‌journal‌entry‌in‌the‌books‌of‌Fastrak‌Corporation‌will‌be‌Purchase‌debit,‌Freight‌debit‌and‌
Accounts‌Payable‌and‌Cash‌credit.
Q4:
a)‌No.‌It's‌a‌consignment
b)‌Yes.‌The‌goods‌are‌in‌transit‌but‌already‌belong‌to‌Kingsway.
c)‌Yes.‌Goods‌sold‌and‌finished‌goods‌are‌in‌inventory‌of‌Kingsway
Q5:
Producers‌need‌to‌calculate‌costs‌to‌predict‌future‌business‌expenses‌and‌evaluate‌their‌own‌
performance
Producers‌need‌to‌calculate‌costs‌to‌predict‌future‌business‌expenses‌and‌evaluate‌their‌own‌
performance
Q6:
Specific identification is‌used‌to‌track‌and‌cost‌specific‌and‌identifiable‌inventory‌items‌that‌are‌
either‌in‌or‌out‌of‌stock‌on‌an‌individual‌basis.‌This‌is‌done‌with‌items‌a‌company‌has‌identified‌
via‌RFID‌tag,‌stamped‌receipt‌date,‌or‌serial‌number.‌
FIFO is‌an‌acronym‌for‌first-in,‌first-out‌and‌means‌that‌the‌oldest‌inventory‌items‌are‌recorded‌
© 2020 by Dr. Nguyen Huu Cuong

“Liberal Arts - Self-initiative - Pragmatism”

3


as‌sold‌first.‌Essentially,‌FIFO‌assumes‌that‌inventory‌items‌are‌sold‌in‌the‌order‌in‌which‌they‌
are‌acquired:‌inventory‌items‌bought‌first‌are‌the‌first‌ones‌to‌be‌sold,‌and‌inventory‌items‌
bought‌later‌are‌sold‌later.‌Thus,‌the‌cost‌of‌inventory‌reflected‌to‌the‌balance‌sheet‌represents‌
the‌cost‌of‌inventory‌that‌was‌purchased‌most‌recently.
LIFO is‌an‌acronym‌for‌last-in,‌first‌out‌and‌assumes‌that‌the‌most‌recent‌inventory‌items‌

purchased‌are‌the‌first‌ones‌to‌be‌sold,‌and‌inventory‌items‌purchased‌first‌are‌sold‌last.‌
Q7:
a) Specific‌identification
b)‌FIFO
c)‌LIFO
Q8:
Because‌when‌a‌business‌purchases‌items‌of‌inventory,‌they‌may‌pay‌different‌prices‌due‌to‌
diversity‌in‌the‌types‌of‌inventory‌stock‌or‌the‌same‌stock‌items,‌purchased‌at‌different‌times.
In‌the‌weighted‌average‌cost‌method,‌the‌cost‌of‌goods‌available‌for‌sale‌is‌divided‌by‌the‌
number‌of‌units‌available‌for‌sale‌and‌is‌commonly‌used‌when‌inventory‌items‌are‌so‌melded‌or‌
identical‌to‌each‌other‌that‌it‌is‌impossible‌to‌assign‌specific‌costs‌to‌single‌units.
Q9:
1.‌Restaurants,‌grocers‌and‌other‌businesses‌working‌with‌perishables‌will‌obviously‌want‌to‌use‌
FIFO.‌The‌first‌products‌in‌really‌are‌the‌first‌products‌out‌in‌that‌situation,‌and‌taking‌inventory‌
like‌that‌will‌help‌company‌keep‌a‌realistic‌view‌of‌inventory‌costs.
2.‌LIFO‌will‌report‌the‌lowest‌income,‌while‌specific‌identification‌and‌the‌weighted‌average‌
method‌both‌fall‌in‌between.
3.‌FIFO‌or‌the‌specific‌identification‌methods‌keep‌precise‌track‌of‌‌historical‌costs‌compared‌
with‌revenue
4.‌LIFO‌can‌compare‌revenue‌with‌the‌current‌costs‌of‌goods
Q10:
FIFO‌is‌the‌most‌precise‌method‌and‌reports‌the‌highest‌income.
Q11:
(a)‌cash‌(pre-tax):‌the‌FIFO‌is‌higher‌than‌average‌inventory‌cost
(b)‌ending‌inventory:‌the‌FIFO‌is‌lower‌than‌average‌inventory‌cost
(c)‌cost‌of‌goods‌sold:‌the‌FIFO‌is‌higher‌than‌average‌inventory‌cost
(d)‌net‌income:‌the‌FIFO‌is‌higher‌than‌average‌inventory‌cost
(e)‌retained‌earnings:‌the‌FIFO‌is‌lower‌than‌average‌inventory‌cost
Q13:


© 2020 by Dr. Nguyen Huu Cuong

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44K06.
1
a)
b)
c)
d)
e)
f)

Financial Accounting 1 –
ACC2001
CHAPTER ASSIGNMENT
(Chapter 3)

Understated
Understated
Overstated
Understated
Overstated
Understated

Q14: Too‌early
Inventory:‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌Overstated

Net‌income:‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌Unaffected
Accounts‌Payable:‌‌‌‌‌‌‌‌‌‌‌‌‌Overstated
Retained‌Earning:‌‌‌‌‌‌‌‌‌‌‌‌‌‌Unaffected
Q15:
Cost‌and‌net‌realizable‌value‌is‌the‌estimated‌selling‌price‌in‌the‌normal‌course‌of‌business,‌less‌
reasonably‌predictable‌costs‌of‌completion,‌disposal,‌and‌transportation.‌Obviously,‌these‌
measurements‌can‌be‌somewhat‌subjective,‌and‌may‌require‌the‌exercise‌of‌judgment‌in‌their‌
determination.‌It‌is‌also‌important‌to‌note‌that‌a‌company‌using‌LIFO‌or‌the‌retail‌would‌not‌use‌
the‌lower-of-cost-or-NRV‌method,‌but‌would‌instead‌value‌inventory‌at‌lower‌of‌cost‌
Q19:
The‌periodic‌system‌relies‌upon‌an‌occasional‌physical‌count‌of‌the‌inventory‌to‌determine‌
the‌ending‌inventory‌balance‌and‌the‌cost‌of‌good‌sold,‌while‌the‌perpetual‌system‌keeps‌
continual‌track‌of‌inventory‌balances.‌The‌perpetual‌uses‌book‌records‌while‌periodic‌uses‌
physical‌verification.‌About‌the‌updation,‌periodic‌updates‌at‌the‌end‌of‌accounting‌period‌
and‌the‌perpetual‌updates‌continuously.
Chapter 5 "Reporting and Analysing Receivables"

Q3:
I‌should‌think‌about‌the‌price‌of‌my‌production,‌the‌cost,‌the‌kind‌of‌my‌business,‌is‌it‌a‌
company‌or‌just‌a‌small‌shop.
Q4:
Beacause‌companies‌that‌use‌a‌perpetual‌system‌may‌still‌conduct‌an‌annual‌physical‌inventory.‌
In‌the‌periodic‌inventory‌system,‌physical‌counts‌are‌used‌to‌determine‌the‌amount‌of‌goods‌
© 2020 by Dr. Nguyen Huu Cuong

“Liberal Arts - Self-initiative - Pragmatism”

5



sold.‌In‌the‌perpetual‌system,‌a‌year-end‌physical‌inventory‌validates‌the‌inventory‌records.
Q5:
The‌periodic‌inventory‌system‌uses‌an‌occasional‌physical‌count‌to‌measure‌the‌level‌of‌
inventory‌and‌the‌cost‌of‌goods‌sold
The‌perpetual‌system‌keeps‌track‌of‌inventory‌balances‌continuously,‌with‌updates‌made‌
automatically‌whenever‌a‌product‌is‌received‌or‌sold
Q6:
Because‌purchases‌of‌merchandise‌for‌resale‌are‌not‌considered‌end-user‌goods‌at‌the‌time‌of‌
purchase‌by‌the‌retailer‌because‌are‌still‌in‌the‌distribution‌phase.‌This‌is‌an‌important‌distinction
because‌any‌sales‌tax‌paid‌by‌the‌retailer‌for‌these‌goods‌is‌considered‌a‌cost‌of‌doing‌business‌
and‌can‌qualify‌as‌a‌tax‌reduction.
Q7:
The‌cost‌of‌missing‌this‌purchase‌discount‌=‌1%*48000‌=‌480$
Q8:
Lebel‌should‌record‌the‌cost‌of‌good‌sold‌in‌June,‌and‌record‌the‌sale‌as‌revenue‌in‌July
The‌customer‌should‌record‌the‌purchase‌os‌inventory‌in‌June
Q9:
Quantity‌discount‌is‌an‌incentive‌offered‌to‌buyers‌that‌results‌in‌a‌decreased‌cost‌per‌unit‌of‌
goods‌or‌materials‌when‌purchased‌in‌greater‌numbers.
Sales‌Discount:‌A‌sales‌discount‌refers‌to‌reduction‌in‌the‌price‌of‌an‌item‌or‌product‌that‌a‌
customer‌buys‌from‌a‌retailer.
Purchase‌Discounts:‌Purchase‌discounts‌are‌the‌reductions‌that‌retailers‌and‌stores‌get‌from‌their‌
wholesalers.‌It‌offered‌to‌stores‌can‌depend‌on‌variety‌of‌factors‌such‌as‌size‌of‌order,‌a‌cut‌in‌
prices‌of‌raw‌material,‌etc
Q10:
Because‌purchase‌returns‌can‌be‌increased‌the‌Inventory‌and‌Accounts‌Payable‌accounts‌when‌
the‌goods‌were‌originally‌purchased,‌it‌will‌decrease‌these‌accounts‌when‌goods‌are‌returned,‌or‌
when‌it‌is‌granted‌an‌allowance.
Q11:
A‌purchase‌discount‌is‌a‌reduction‌in‌price‌that‌a‌supplier‌or‌wholesaler‌offers‌to‌a‌retailer‌or‌

store
A‌sales‌discount‌is‌a‌reduction‌in‌price‌the‌customer‌receives‌when‌he‌buys‌a‌product‌from‌a‌
retailer‌or‌store
A‌quantity‌discount‌is‌an‌incentive‌offered‌to‌a‌buyer‌that‌results‌in‌a‌decreased‌cost‌per‌unit‌of‌
© 2020 by Dr. Nguyen Huu Cuong

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6


44K06.
1

Financial Accounting 1 –
ACC2001
CHAPTER ASSIGNMENT
(Chapter 3)

goods‌or‌materials‌when‌purchased‌in‌greater‌numbers
Q13:
Because‌purchase‌returns‌can‌be‌increased‌the‌Inventory‌and‌Accounts‌Payable‌accounts‌when‌
the‌goods‌were‌originally‌purchased,‌it‌will‌decrease‌these‌accounts‌when‌goods‌are‌returned,‌or‌
when‌it‌is‌granted‌an‌allowance.

© 2020 by Dr. Nguyen Huu Cuong

“Liberal Arts - Self-initiative - Pragmatism”

7



BRIEF EXERCISES
Financial Accounting: Tools for Decision-Making, 7th Canadian Edition (Kimmel P.D. et
al., 2017)
Chapter 6 "Reporting and Analyzing Inventory"

BE6-1:
(a)‌Goods‌shipped‌on‌consignment‌by‌Helgeson‌to‌another‌company‌‌‌be‌included‌in‌the‌
inventory
(b)‌Goods‌held‌on‌consignment‌by‌Helgeson‌from‌another‌company‌‌not‌be‌included‌in‌the‌
inventory
(c)‌Goods‌in‌transit‌to‌a‌customer,‌shipped‌FOB‌destination‌‌be‌included‌in‌the‌inventory
(d)‌Goods‌in‌transit‌to‌Helgeson‌from‌a‌supplier‌shipped‌FOB‌shipping‌point‌‌be‌included‌in‌
the‌inventory
(e)‌Goods‌in‌transit‌to‌a‌customer,‌shipped‌FOB‌shipping‌point‌‌not‌be‌included‌in‌the‌inventory
(f)‌Goods‌in‌transit‌to‌Helgeson‌from‌a‌supplier,‌shipped‌FOB‌destination‌‌not‌be‌included‌in‌
the‌inventory
BE6-2:
The‌correct‌cost‌of‌the‌inventory‌on‌august‌31‌=‌Inventory‌Count‌on‌august‌31‌-‌‌inventory‌held‌
on‌consignment‌for‌a‌local‌designer‌-‌inventory‌that‌had‌been‌sold‌to‌customers‌but‌was‌being‌
held‌for‌alterations‌+‌The‌second‌shipment‌cost‌plus‌freight‌charges‌terms‌FOB‌shipping‌point‌
shipped‌on‌august‌28
The‌correct‌cost‌of‌the‌inventory‌on‌august‌31‌=‌95‌000‌-500-1000+(4750+250)
The‌correct‌cost‌of‌the‌inventory‌on‌august‌31‌=‌98‌500
BE6-3:
Cost Of Goods Available for Sale
3‌electric‌pianos‌‌$600
$1,800
2‌electric‌pianos‌‌$475

$950
$2,750
Cost‌of‌goods‌sold‌=‌$600‌+‌$475‌=‌$1,075
Ending‌inventory‌=‌2‌x‌$600‌+‌$475‌=‌$1,675
BE6-4:
Purchases
date

units

cost

Cost of goods sold
total

units

cost

Apr.‌1

© 2020 by Dr. Nguyen Huu Cuong

total

Balance
units
15

cost

$18

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8

total
$270


Financial Accounting 1 –
ACC2001
CHAPTER ASSIGNMENT
(Chapter 3)

44K06.
1
6 30

$15

$450

9

14 12

$12

15


$18

10

$15

$144

15

$18

30

$15

$720

20

$15

$300

20

$15

12


$12

$444

BE6-5:
Purchases
date

units

cost

Cost of goods sold
total

units

cost

total

Apr.‌1
6 30

$200

$6,000

9


25

14 12

$205

$194

$4,850

$2,460

Balance
units

cost

total

15

$180

$2,700

45

$194


$8,730

20

$194

$3,880

32

$198

$6,336

BE6-6:
(a) FIFO
Purchases
units

cost

Cost of goods sold
total

units

cost

total


Ending inventory
units

cost

Purchase
s

250

$70

$17,500

250

$70

Purchase

500

$100

$50,000

250

$70


© 2020 by Dr. Nguyen Huu Cuong

total
$17,500

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9


s

Sales‌

Purchase
s

900

$120

250

$70

50

$100

$22,50

0

$108,00
0

Sales‌

325

$100

$32,50
0

500

$100

$67,500

450

$100

$45,000

450

$100


900

$120

125

$100

900

$120

$153,00
0

$120,50
0

Cost‌of‌goods‌sold‌=‌$22,500‌+‌$32,500‌=$55,000
Ending‌inventory‌=‌$120,500
(b)‌)‌average‌cost
Purchases
units

cost

Cost of goods sold
total

units


cost

total

Ending inventory
units

cost

total

Purchase
s

250

$70

$17,500

250

$70

$17,500

Purchase
s


500

$100

$50,000

750

$90

$67,500

450

$90

$40,500

1350

$110

$148,50
0

1025

$110

$112,750


Sales‌
Purchase
s

300
900

$120

Sales‌

$90

$27,00
0

$108,00
0
325

$110

$35,75
0

Cost‌of‌goods‌sold‌=‌$27,000‌+‌$35,750‌=$62,750
© 2020 by Dr. Nguyen Huu Cuong

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10


44K06.
1

Financial Accounting 1 –
ACC2001
CHAPTER ASSIGNMENT
(Chapter 3)

Ending‌inventory‌=‌$112,750

BE6-7:
(a)‌Average.‌The‌ending‌inventory‌is‌valued‌at‌the‌average‌of‌the‌cost‌of‌the‌product,‌including‌
earlier‌costs.‌Since‌this‌formula‌yields‌a‌high‌ending‌inventory,‌the‌result‌will‌not‌be‌closer‌to‌
replacement‌cost.‌This‌result‌is‌achieved‌with‌the‌FIFO‌cost‌formula.
(b)‌FIFO.‌The‌cost‌of‌goods‌is‌valued‌using‌the‌earlier,‌higher‌costs.‌Since‌the‌revenue‌reflects‌
current‌lower‌prices,‌the‌FIFO‌cost‌formula‌does‌not‌match‌current‌costs‌against‌revenue.‌This‌
result‌is‌better‌achieved‌by‌the‌average‌cost‌formula.
BE6-8:
Total‌assets‌in‌the‌statement‌of‌financial‌position‌will‌be‌overstated‌by‌the‌amount‌that‌ending‌
inventory‌is‌overstated,‌$25,000.‌Total‌liabilities‌will‌also‌be‌overstated‌by‌$25,000‌(assuming‌
the‌"supplier"‌was‌not‌paid).‌Shareholders'‌equity‌will‌not‌be‌affected.
BE6-9:
Impact‌during‌current‌year:
- Asset:‌as‌closing‌stock‌is‌understated‌(which‌is‌part‌of‌asset)‌therefore‌assets‌will‌also‌be‌
understated‌by‌$7000
- Shareholder‌Equity:‌As‌net‌profit‌is‌also‌understated‌by‌$7000‌(which‌is‌added‌in‌

shareholder's‌equity)‌therefore‌shareholder's‌equity‌will‌also‌be‌understated.
- Liability:‌Shareholder‌equity‌is‌part‌of‌liability‌side‌and‌if‌it‌is‌understated‌therefore‌net‌
liabilities‌will‌also‌be‌understated.
Impact‌in‌next‌year:
- Assets:‌Opening‌stock‌does‌not‌reflect‌in‌assets‌at‌the‌end‌of‌year‌therefore‌therefore‌
there‌will‌be‌no‌impact‌on‌assets.
- Shareholder‌equity:‌The‌shareholder's‌equity‌was‌understated‌by‌$7000‌last‌year‌however
in‌this‌year‌there‌is‌overstatement‌of‌net‌profit‌of‌$7000‌which‌means‌both‌are‌off‌setted‌
and‌there‌is‌no‌impact‌on‌total‌shareholder's‌equity.
- Liability:‌As‌in‌two‌years‌all‌the‌error‌are‌washed‌out/off‌setted‌and‌shareholders's‌equity‌
is‌also‌properly‌stated‌therefore‌there‌is‌no‌impact‌on‌liabilities.
BE6-10:
(a)
© 2020 by Dr. Nguyen Huu Cuong

“Liberal Arts - Self-initiative - Pragmatism”

11


the‌lower‌of‌cost‌and‌net‌realizable‌value
Desktops‌
$326,000
Tables‌and‌readers
$168,700
Laptops
$221,020
Accessories‌and‌parts
$94,300
(b)

Total‌the‌lower‌of‌cost‌and‌net‌realizable‌value‌=‌326,000‌+‌168,700‌+‌221,020‌+‌94,300‌=‌
810,020
Cost‌=‌834,120
Debit‌cost‌of‌good‌sold‌24,100
Credit‌inventory‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌24,100
BE6-13:
(a)FIFO
cost‌of‌the‌ending‌inventory‌=‌600‌x‌11‌=‌6,600
cost‌of‌goods‌sold‌=‌370‌x‌9‌+‌700‌x‌12‌+‌200‌x‌11‌=‌13,930
(b)Average‌cost
cost‌of‌the‌ending‌inventory‌=‌‌x‌600‌=‌6,587
cost‌of‌goods‌sold‌=‌‌x‌1270‌=‌13,943
BE6-14:
(a)
cost‌of‌the‌ending‌inventory‌=‌1‌300‌x‌45‌+‌200‌x‌50‌=‌68‌500
cost‌of‌goods‌sold‌=‌begining‌inventory‌+‌purchases‌–‌ending‌inventory‌=‌67‌500‌+‌90‌000‌+‌58‌
500‌–‌68‌500‌=‌147‌500
(b)
cost‌of‌the‌ending‌inventory‌=‌1‌300‌x‌45‌+‌200‌x‌50‌=‌68‌500
cost‌of‌goods‌sold‌=‌1‌500‌x‌45‌+‌1‌600‌x‌50‌=‌147‌500
they‌are‌same

BE6-15:
(a)
Debit‌accounts‌receivable‌‌‌8,400
Credit‌sales‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌8,400
Debit‌cost‌of‌goods‌sold‌‌‌‌‌3,500
Credit‌inventory‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌3,500
Debit‌inventory‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌6,000
Credit‌accounts‌payable‌‌‌‌‌‌‌‌‌‌‌‌‌6,000


© 2020 by Dr. Nguyen Huu Cuong

“Khai phóng - Tự thân - Hữu ích”

12


44K06.
1

Financial Accounting 1 –
ACC2001
CHAPTER ASSIGNMENT
(Chapter 3)

Debit‌accounts‌receivable‌‌‌8,800
Credit‌sales‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌8,800
Debit‌cost‌of‌goods‌sold‌‌‌‌‌200‌x‌5‌+‌600‌x‌6‌=‌4,600
Credit‌inventory‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌4,600
(b) Cost‌of‌goods‌sold‌(COGS)‌=‌Beginning‌inventory‌+‌Purchases‌–‌Closing‌inventory
‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌=‌900‌x‌5‌+‌1‌000‌x‌6‌–‌(‌900‌x‌5‌+‌600‌x‌6‌)‌=‌2‌400
Credit‌inventory‌‌‌‌‌‌‌‌‌‌‌‌‌‌8‌100
Credit‌cost‌of‌goods‌sold‌2‌400
Debit‌inventory‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌4‌500
Debit‌purchases‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌6‌000

© 2020 by Dr. Nguyen Huu Cuong

“Liberal Arts - Self-initiative - Pragmatism”


13


EXERCISES
Financial Accounting: Tools for Decision-Making, 7th Canadian Edition (Kimmel P.D. et
al., 2017)
Chapter 6 "Reporting and Analyzing Inventory"

E6-1:
1.‌Goods‌held‌on‌consignment‌for‌Boxes‌Unlimited‌since‌December‌22‌‌Do not include
2.‌Goods‌that‌are‌still‌in‌transit‌and‌were‌shipped‌to‌a‌customer‌FOB‌destination‌on‌January‌29‌
Include in inventory‌
3.‌Goods‌shipped‌on‌consignment‌to‌Rinehart‌Holdings‌Ltd.‌on‌January‌5‌‌Include in inventory
4.‌Freight‌costs‌due‌on‌goods‌in‌transit‌from‌item‌2‌above‌‌Do not include
5.‌Goods‌that‌are‌still‌in‌transit‌and‌were‌purchased‌FOB‌destination‌from‌a‌supplier‌on‌January‌
25‌‌Do not include
6.‌Goods‌that‌are‌still‌in‌transit‌and‌were‌purchased‌FOB‌shipping‌point‌from‌a‌supplier‌on‌
January‌25‌‌Include in inventory‌
7.‌Goods‌that‌are‌still‌in‌transit‌and‌were‌shipped‌to‌a‌customer‌FOB‌shipping‌point‌on‌January‌
29  Do not include
E6-2:
1.‌Add‌to‌inventory‌35,000
2.‌Add‌to‌inventory‌95,000
3.‌Add‌to‌inventory‌28,000
4.‌No‌effect‌on‌inventory‌49,000
5.‌Add‌to‌inventory‌30,500
6.‌Deduct‌from‌inventory‌15,000
correct‌inventory‌=‌35,000‌+‌95,000‌+28,000‌+‌49,000‌+‌30,500‌-‌15,000‌=‌222,500
E6-3:

(a)cost‌of‌goods‌sold‌=‌2,400‌+‌1,900‌=‌4,300

E6-4:
units

Purchases
cost
total

Cost of goods sold
units
cost
total

Beginnin
g‌
Sales‌
Purchases

50
25
200

$275

© 2020 by Dr. Nguyen Huu Cuong

$210
$225


$55,000

$16,12
5

Ending inventory
units
cost
total
50
$210
100

$225

$33,000

75

$225

$16,875

75

$225

“Khai phóng - Tự thân - Hữu ích”

14



44K06.
1

Financial Accounting 1 –
ACC2001
CHAPTER ASSIGNMENT
(Chapter 3)

Sales
Purchases

75
175
300

$290

$225
$275

$65,00
0

$87,000

Sales

25

175

$275
$290

$57,62
5
(a)‌cost‌of‌goods‌sold‌=‌$16,125‌+‌$65,000‌+‌$57,625‌=‌$138,750
cost‌of‌the‌ending‌inventory‌‌=‌$36,250
(b)‌Gross‌profit =‌Revenue‌-‌Cost‌of‌Goods‌Sold‌
=‌400‌x‌(75‌+‌250‌+‌200)‌-‌138,750
=‌71‌250
gross‌profit‌margin‌=‌‌=‌‌=‌0.339

200

$275

$71,875

25

$275

$6,875

25
300

$275

$290

$93,875

125

$290

$36,250

(c)
units

Purchases
cost
total

Cost of goods sold
units
cost
total

Beginnin
g‌
Sales‌
Purchases

75
200


$275

250
300

$290

Sales

$16,50
0

$55,000

Sales
Purchases

$220

$260

$65,00
0

$87,000
200

$289

$57,80

0

Ending inventory
units
cost
total
50
$210
100
75

$225
$220

$33,000
$16,500

75
200
25

$220
$275
$260

$71,500
$6,500

25
300

125

$260
$290
$289

$93,500
$36,125

cost‌of‌goods‌sold‌=‌139,300
gross‌profit‌=‌70,700
the‌gross‌profit‌determined‌in‌part‌(b)‌is‌higher‌because‌cost‌of‌goods‌sold‌in‌FIFO‌is‌lower‌than‌
in‌average
E6-5:
© 2020 by Dr. Nguyen Huu Cuong

“Liberal Arts - Self-initiative - Pragmatism”

15


Purchases
units
cost
total
Beginnin
g‌
Purchases

1,200


$127

$152,40
0

Sales
Purchases

1,000
1,800

$128

1,600
1,000

$126

$126,00
0

$87,000

Sales
Purchases

Cost of goods sold
units
cost

total

$127

$203,20
0

Ending inventory
units
cost
total
500 $125 $62,500
1,700

$126

700

$126

2,500

$127

900

$214,20
0
$88,200


$317,50
0
$127 $114,300

$129

$129,00
1,900 $128 $243,20
0
0
(a)‌cost‌of‌goods‌sold‌=‌$329,200
cost‌of‌the‌ending‌inventory‌‌=‌$243,200
(b)‌Gross‌profit =‌Revenue‌-‌Cost‌of‌Goods‌Sold‌=‌(1,000‌x‌200‌+‌1,600‌x‌205)‌-‌329,200‌=‌
198,800
gross‌profit‌margin‌=‌‌=‌0,38
(c)
units
Beginnin
g‌
Purchases

1,200

Purchases
cost
total
$127

$152,40
0


Sales
Purchases

500
500
1,800

$128

700
900
1,000

$129

$125
$127

$126,00
0

$87,000

Sales
Purchases

Cost of goods sold
units
cost

total

$127
$128

$129,00
0

$204,10
0

Ending inventory
units
cost
total
500 $125 $62,500
500

$125

1,200

$127

$214,90
0

700

$127


$88,900

700
1,800

$127
$128

900

$128 $115,200

900

$128

1000

$129

cost‌of‌goods‌sold‌=‌$330,100

© 2020 by Dr. Nguyen Huu Cuong

“Khai phóng - Tự thân - Hữu ích”

16

$319,30

0

$244,20
0


44K06.
1

Financial Accounting 1 –
ACC2001
CHAPTER ASSIGNMENT
(Chapter 3)

gross‌profit =‌197,900
gross‌profit‌determined‌in‌part‌(b)‌higher‌than‌using‌FIFO
E6-6:
(a)FIFO
Purchases
units
cost
total
Beginnin
g
Purchases

2,300

$6


Cost of goods sold
units
cost
total

$13,800

Sales

1,500
1,000

Purchases

4,500

$7

$31,500

Purchases

1,500

$8

$12,000

Sales


$5
$6

1,300
4,400

$6
$7

$13,500

$38,600

Ending inventory
units
cost
total
1,500
$5
$7,500
1,500
2,300

$5
$6

1,300
1,300
4,500
1,300

4,500
1,500
100
1,500

$6
$6
$7
$6
$7
$8
$7
$8

$21,300
$7,800
$39,300
$51,300
$12,700

Cost‌of‌goods‌sold‌=‌$52,100
Ending‌inventory‌=‌$12,700
Average
units
Beginnin
g
Purchases
Sales
Purchases
Purchases

Sales

Purchases
cost
total

2,300

$6

$13,800

4,500
1,500

$7
$8

$31,500
$12,000

Cost of goods sold
units
cost
total

2,500

$5.6


$14,000

5,700

$6.9

$39,330

Ending inventory
units
cost
total
1,500
$5
$7,500
3,800
1,300
5,800
7,300
1,600

$5.6
$5.6
$6.7
$6.9
$6.9

$21,280
$7,280
$38,860

$50,370
$11,040

Cost‌of‌goods‌sold‌=‌$53,330

© 2020 by Dr. Nguyen Huu Cuong

“Liberal Arts - Self-initiative - Pragmatism”

17


Ending‌inventory‌=‌$11,040
(b)‌the‌average‌cost‌method‌results‌in‌a‌higher‌cost‌of‌goods‌sold‌because‌the‌cost‌of‌inventory‌is
rising
(c)‌the‌FIFO‌cost‌method‌results‌in‌a‌higher‌profit‌becauses‌it‌produces‌the‌lower‌cosr‌of‌goods‌
sold‌when‌prices‌are‌rising
(d)‌the‌FIFO‌cost‌method‌results‌in‌a‌higher‌ending‌inventory‌because‌the‌cost‌of‌invetory‌is‌
rising
(e)‌both‌cost‌methods‌result‌in‌the‌same‌pre-tax‌cash‌flow.‌The‌cost‌methods‌don’t‌change‌the‌
pre-tax‌cash‌flows‌of‌a‌company
E6-7:
(a)
units
9,000
15,00
0

Purchases
cost

total
$12 $108,00
0
$14 $210,00
0

Cost of goods sold
units
cost
total

9000
13,00
0

$12
$14

$290,00
0

Ending inventory
units
cost
total
9,000
$12 $108,00
0
9,000
$12

15,00
0

$14

$318,00
0

2,000

$14

$28,000

(b)
units
9,000
15,00
0

Purchases
cost
total
$12 $108,00
0
$14 $210,00
0

Cost of goods sold
units

cost
total

22,00
0

$13.2
5

$291,50
0

Ending inventory
units
cost
total
9,000
$12 $108,00
0
24,00 $13.2 $318,00
0
5
0
2,000 $13.2 $26,500
5

(c)
Sales
Cost‌of‌goods‌sold
Gross‌profit

Operating‌expenses
© 2020 by Dr. Nguyen Huu Cuong

FIFO
$525,000‌
290,000
235,000
200,000

Average Cost
$525,000
291,500
233,500
200,000
“Khai phóng - Tự thân - Hữu ích”

18


44K06.
1

Financial Accounting 1 –
ACC2001
CHAPTER ASSIGNMENT
(Chapter 3)

Income‌before‌income‌tax
Income‌tax‌expense‌(30%)
Net‌income


35,000
10,500
24,500

33,500
10,050
23,450

E6-8:
(a)
2018

2017

Cost‌of‌goods‌sold

174,000

150,000

Ending‌inventory

35,000

34,000

(b)
2018


2017

Cost‌of‌goods‌
sold‌

Understated

6,000

Overstated

4,000

Profit‌before‌
income‌tax

Overstated

6,500

Understated

4,000

Assets

Overstated

2,000


Understated

4,000

Liabilities

Will‌not‌effect

0

Will‌not‌effect

0

Total‌
shareholders‌
equity

Overstated

2,000

Understated

4,000

E6-9:
(a)‌inventory‌2017‌=‌60,000
© 2020 by Dr. Nguyen Huu Cuong


“Liberal Arts - Self-initiative - Pragmatism”

19


Cost‌of‌goods‌sold‌2017‌=‌202,000
Gross‌profit‌=‌250,000‌–‌202,000‌=‌48,000

E6-10:
(a)
Cameras:
Sony‌4‌x‌$160‌=‌$640
Canon‌8‌x‌$150‌=‌$1,200
Light‌Meters:
Gossen‌12‌x‌$135‌‌=‌$1,620
Sekonic‌10‌x‌$110‌=‌$1,100
Total = $4,560
(b)
Debit‌cost‌of‌goods‌sold‌‌‌$4,560
Credit‌inventory‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌$4,560

E6-13:
(a)‌cost‌of‌goods‌available‌for‌sale‌=‌beginning‌inventory‌+‌cost‌of‌goods‌purchases
=‌40,000‌+‌(105,000‌+‌82,000‌+‌83,200)‌=‌310,200
(b)‌FIFO
Purchases
units
cost
total
Beginnin

g‌
Purchases

Purchases

5,000

4,000

$21

$20.5

$105,00
0
$82,000

Sales‌
Purchases

Cost of goods sold
units
cost
total

2,000
3,000
4,000

$20.8


© 2020 by Dr. Nguyen Huu Cuong

$20
$21

$83,200

$103,00
0

Ending inventory
units
cost
total
2,000
$20 $40,000
2,000

$20

5,000

$21

2,000
5,000
4,000

$20

$21
$20.5

2,000
4,000

$21
$20.5

2,000

$21

“Khai phóng - Tự thân - Hữu ích”

20

$145,00
0
$227,00
0
$124,00
0


44K06.
1

Financial Accounting 1 –
ACC2001

CHAPTER ASSIGNMENT
(Chapter 3)

Sales‌

2,000
4,000

$21
$20.5

$124,00
0

4,000
4,000

$20.5
$20.8

4,000

$20.8

$207,20
0
$83,200

Cost‌of‌goods‌sold‌=‌$103,000‌+‌$124,000‌=‌$227,000
Ending‌inventory‌=‌$83,200

Average
Purchases
units
cost
total
Beginnin
g‌
Purchases

5,000

Purchases

4,000 $20.5

$21

$105,00
0
$82,000

Sales‌
Purchases

Cost of goods sold
units
cost
total

5,000

4,000 $20.8

Sales‌

$20.6

$103,00
0

$83,200
6,000

$20.6
8

$124,08
0

Ending inventory
units
cost
total
2,000
$20 $40,000
7,000

$20.7

11,000


$20.6

6,000

$20.6

10,00
0
4,000

$20.6
8
$20.6
8

Cost‌of‌goods‌sold‌=‌$103,000‌+‌$124,500‌=‌$227,080
Ending‌inventory‌=‌$82,720
(c)‌gross‌profit‌=‌revenue‌–‌cost‌of‌good‌sold
Revenue‌=‌40‌x‌(5000‌+‌6000)‌=‌440,000
FIFO‌:‌gross‌profit‌=‌440,000‌-‌227,000‌=‌213,000
Average‌:‌gross‌profit‌=‌440,000‌-‌227,080‌=‌212,92
FIFO‌cost‌would‌result‌in‌the‌higher‌gross‌profit‌than‌average‌cost

© 2020 by Dr. Nguyen Huu Cuong

“Liberal Arts - Self-initiative - Pragmatism”

21

$144,90

0
$226,60
0
$123,60
0
$206,80
0
$82,720


E6-14:
(a)FIFO
units
Beginnin
g‌
Purchases
Purchases
Purchases

2,300
4,500
1,500

Purchases
cost
total
$6
$7
$8


Cost of goods sold
units
cost
total

$13,800
$31,500
$12,000

Sales‌

1,500
2,300
4,400

$5
$6
$7

$52,100

Ending inventory
units
cost
total
1,500
$5
$7,500
1,500
2,300

1,500
2,300
4,500
1,500
2,300
4,500
1,500

$5
$6
$5
$6
$7
$5
$6
$7
$8

100
1,500

$7
$8

$21,300
$52,800

$64,800
$12,700


ending‌inventory‌=‌$12,700
cost‌of‌goods‌sold‌=‌$52,100
Average
Purchases
units
cost
total
Beginnin
g‌
Purchases
Purchases
Purchases
Sales‌

2,300
4,500
1,500

$6
$7
$8

Cost of goods sold
units
cost
total

$13,800
$31,500
$12,000

8,200

$6.6

$54,120

Ending inventory
units
cost
total
1,500
$5
$7,500
3,800
8,300
9,800
1,600

$5.6
$6.4
$6.6
$6.6

$21,280
$53,120
$64,680
$10,560

ending‌inventory‌=‌$10,560
cost‌of‌goods‌sold‌=‌$54,120

(b)because‌average‌unit‌cost‌=‌‌=‌6,6
(c) Cost‌of‌goods‌sold‌(COGS)‌=‌Beginning‌inventory‌+‌Purchases‌–‌Closing‌inventory
=‌7,500‌+‌57,300‌-‌12,700‌=‌52,100
Chapter 5 "Reporting and Analysing Receivables"

E5-4:

© 2020 by Dr. Nguyen Huu Cuong

“Khai phóng - Tự thân - Hữu ích”

22


44K06.
1

Financial Accounting 1 –
ACC2001
CHAPTER ASSIGNMENT
(Chapter 3)

(a)
Debit‌inventory‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌28,000
Credit‌account‌payable‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌28,000
Debit‌inventory‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌700
Credit‌cash‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌700
Debit‌supplies‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌5,000
Credit‌account‌payable‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌5,000
Debit‌account‌payable‌‌‌‌‌‌‌‌‌3,500‌‌‌‌‌‌‌‌

Credit‌inventory‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌3,500‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌
Debit‌account‌payable‌‌‌‌‌‌‌‌‌24,500
Credit‌cash‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌24,500
(b)
Debit‌account‌payable‌‌‌‌‌‌‌‌‌24,500
Credit‌cash‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌24500x(100%-1%)‌=‌24,255
Credit‌inventory‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌1%‌x‌24,500‌=‌245
‌‌‌‌‌‌‌‌‌‌‌‌‌‌
Intermediate Financial Accounting - Volume 1 (Version 2019 - Revision A) by (Glenn
Arnold & Suzanne Kyle)‌
Chapter 7 "Inventory"

7-1
Salaries‌of‌assembly‌line‌workers
Raw‌materials
Salary‌of‌factory‌foreman
Heating‌cost‌for‌the‌factory
Miscellaneous‌supplies‌used‌in‌production‌process
Costs‌to‌ship‌raw‌materials‌from‌the‌supplier‌to‌the‌factory
Electricity‌cost‌for‌the‌factory
Depreciation‌of‌factory‌machines
Property‌taxes‌on‌factory‌building
Discounts‌for‌early‌payment‌of‌raw‌material‌purchases

© 2020 by Dr. Nguyen Huu Cuong

“Liberal Arts - Self-initiative - Pragmatism”

23



Salaries‌of‌the‌factory’s‌janitorial‌staff
7-2
FOB Shipping
Owns‌the‌goods‌while‌in‌transit

FOB Destination

P

S

Is‌responsible‌for‌the‌loss‌if‌goods‌are‌
damaged‌in‌transit

P

S

Pays‌for‌the‌shipping‌costs

P

S

7-3
a.‌total‌fixed‌overhead‌=‌150.000‌‌‌=‌1.42 per unit
b.‌using‌the‌standard‌rate‌of‌$1.50‌per‌unit
c.‌‌=‌0.94‌per‌unit
7-4

units
Beginnin
g‌
Purchases
Purchases

50
10

Purchases
cost
total
560
575

28,000
5,750

Sales‌
Purchases

Cost of goods sold
units
cost
total

8
7
12


572

Sales‌

550
560

8,320

6,864
23

560

12,880

Ending inventory
units
cost
total
8
550
4,400
8
50
8
50
10
43
10

43
10
12
20
10
12

550
560
550
560
575
560
575
560
575
572
560
575
572

Cost‌of‌goods‌sold‌=‌21,200
Balance‌‌inventory‌=‌23,814
7-5

© 2020 by Dr. Nguyen Huu Cuong

“Khai phóng - Tự thân - Hữu ích”

24


32,400
38,150
29,830
36,694
23,814


44K06.
1

units

Financial Accounting 1 –
ACC2001
CHAPTER ASSIGNMENT
(Chapter 3)
Purchases
cost
total

Cost of goods sold
units
cost
total

Ending inventory
units
cost
total

8
550
4,400

Beginnin
g‌
Purchases

50

560

28,000

58

Purchases

10

575

5,750

68

Sales‌
Purchases

15

12

572

561.0
3

8,415.45

6,864

Sales‌

53
65

23

563,0
6

12,950.3
8

42

558.6
2
561.0
3

561.0
3
563,0
6
563,0
6

Cost‌of‌goods‌sold‌=‌21,365.83
Balance‌‌inventory‌=‌23,648.52
7-6
a.
The‌lower‌of‌cost‌and‌net‌realizable‌value
Brake‌pad‌#1‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌140
Brake‌pad‌#2‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌175‌
Total‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌315
Soft‌tire‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌325‌
Hard‌tire‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌303
Total‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌628
‌total‌=‌943
‌current‌value‌=‌971
‌adjustment‌‌=‌943-‌971‌=‌-28
Debit‌account‌229‌‌‌‌‌‌‌28
Credit‌account‌152‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌28
b.
The‌lower‌of‌cost‌and‌net‌realizable‌value
Total‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌320
Total‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌637
© 2020 by Dr. Nguyen Huu Cuong

“Liberal Arts - Self-initiative - Pragmatism”


25

32,399.9
6
38,150.0
4
29,734.5
9
36,598.9
23,648.5
2