Accounting Systems: Answers

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1. Problem #5, p. 109 To answer this question, first scale up both of the figures. The units increased by 20% from a base of 3000, so (1.2)(3000) = 3600 units were sold. The price at which they were sold was a 10% increase on a base of $50, so (1.1)(50) = $55. The total gross revenue therefore is (3600)($55) = $198,000. To calculate the net revenue, the 6% returns must be subtracted from the gross figure: (198,000)(.94) = $186,120 2. Problem #9, p. 109 In order to determine the amount of units Delsing needs to produce, the desired ending inventory need to be calculated. This is 40% of the beginning inventory, so (14,000)(.4) = 5600 units. The production will need to include the expected sales, less the beginning inventory and plus the ending inventory: 50,000 14,000 + 5600 = 41,600 is the total that should be produced in the month. 3. Problem #11, p. 109 The LIFO accounting system means "last in, first out". The sales for the month were 1,100. The first step is to subtract the most recent month's production from the amount sold: 1100 850 = 250 units. All 850 units that were produced last month are not going to be on the balance sheet, because of the LIFO system. The ending inventory is going to be the 600 units from the beginning inventory, less 250 of those that were sold. The ending inventory in units therefore is 350 units. These will be listed on the balance sheet at their cost, which was $16. The cost of goods sold will be calculated on the basis of
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