FINANCIAL ACCOUNTING:TOOLS FOR BUSINESS
19th Edition
ISBN: 9781119493624
Author: Kimmel
Publisher: WILEY
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 6, Problem 6.6AP
(a) (1)
To determine
Periodic Inventory System: It is a system in which the inventory is updated in the accounting records on a periodic basis such as at the end of each month, quarter or year. In other words, it is an accounting method which is used to determine the amount of inventory at the end of each accounting period.
In First-in-First-Out method, the cost of initial purchased items are sold first. The value of the ending inventory consists the recent purchased items.
To Determine: The selection of diamonds for selling that should follow by J Gems to maximize the gross profit.
(2)
To determine
The selection of diamonds for selling that should follow by J Gems to minimize the gross profit.
(b)
To determine
To Calculate: The cost of goods sold and gross profit under FIFO method.
(c)
To determine
To Calculate: The cost of goods sold and gross profit under LIFO method.
(d)
To determine
To Explain: The cost flow method that should use by J Gems.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
You have the following information for Jewels Gems. Jewels Gems uses the periodic method of accounting for its inventory transactions. Jewels Gems only carries one brand and size of diamonds—all are identical. Each batch of diamonds purchased is carefully coded and marked with its purchase cost.
March 1
Beginning inventory 150 diamonds at a cost of $310 per diamond.
March 3
Purchased 200 diamonds at a cost of $350 each.
March 5
Sold 180 diamonds for $600 each.
March 10
Purchased 330 diamonds at a cost of $375 each.
March 25
Sold 390 diamonds for $650 each
Assume that Jewels Gems uses the FIFO cost flow assumption. Calculate cost of goods sold. How much gross profit would the company report under this cost flow assumption?
Assume that Jewels Gems uses the LIFO cost flow assumption. Calculate cost of goods sold. How much gross profit would the company report under this cost flow assumption?
Delta Diamonds uses a periodic inventory system. The company had five one-carat diamonds available for sale this year: one was purchased on June 1 for $650, two were purchased on July 9 for $700 each, and two were purchased on September 23 for $750 each. On December 24, it sold one of the diamonds that was purchased on July 9.
Using the FIFO method, its cost of goods sold for the year ended is:
The XZ Ltd. is a retailer and uses the Perpetual Inventory System. The below information is available regarding the purchases and sales activities:
Purchase price: $4.20
Selling price: $5.70
Purchase discount (paid in 10 days): 6%
Sales discount (received in 15 days): 10%
Calculate the correct entries for its business activities.
The XZ purchased 300 units on credit from AA on the 2nd of July.
The XZ sold 200 units on credit to DSX on the 3rd of July.
The XZ returned 50 defective units to AA on the 9th of July.
The XZ paid cash to AA on the 11th of July.
DSX paid its purchase on the 12th of July.
Chapter 6 Solutions
FINANCIAL ACCOUNTING:TOOLS FOR BUSINESS
Ch. 6 - The key to successful business operations is...Ch. 6 - Prob. 2QCh. 6 - What is just-in-time inventory management? What...Ch. 6 - Prob. 4QCh. 6 - Prob. 5QCh. 6 - Prob. 6QCh. 6 - Prob. 7QCh. 6 - Prob. 8QCh. 6 - What is the major advantage and major disadvantage...Ch. 6 - The selection of an inventory cost flow method is...
Ch. 6 - Which assumed inventory cost flow method: (a)...Ch. 6 - Prob. 12QCh. 6 - Prob. 13QCh. 6 - Prob. 14QCh. 6 - Prob. 15QCh. 6 - Prob. 16QCh. 6 - Prob. 17QCh. 6 - Prob. 18QCh. 6 - Why is it inappropriate for a company to include...Ch. 6 - Prob. 20QCh. 6 - Prob. 21QCh. 6 - Prob. 22QCh. 6 - When perpetual inventory records are kept, the...Ch. 6 - How does the average-cost method of inventory...Ch. 6 - Prob. 6.1BECh. 6 - Prob. 6.3BECh. 6 - Prob. 6.4BECh. 6 - Prob. 6.6BECh. 6 - Prob. 6.7BECh. 6 - Prob. 6.8BECh. 6 - Prob. 6.9BECh. 6 - Prob. 6.10BECh. 6 - Prob. 6.11BECh. 6 - Prob. 6.12BECh. 6 - Prob. 6.1DIECh. 6 - Prob. 6.2DIECh. 6 - Prob. 6.3aDIECh. 6 - Prob. 6.1ECh. 6 - Prob. 6.2ECh. 6 - Prob. 6.3ECh. 6 - Prob. 6.4ECh. 6 - Prob. 6.5ECh. 6 - Prob. 6.6ECh. 6 - Prob. 6.7ECh. 6 - Prob. 6.9ECh. 6 - Prob. 6.10ECh. 6 - Inventory data for Jeters Company are presented in...Ch. 6 - Prob. 6.15ECh. 6 - Prob. 6.2APCh. 6 - Prob. 6.3APCh. 6 - Prob. 6.6APCh. 6 - Prob. 6.7APCh. 6 - Prob. 6.9APCh. 6 - Prob. 6.3EYCTCh. 6 - The July 15, 2010, edition of CFO.com contains an...Ch. 6 - Prob. 6.8EYCTCh. 6 - Prob. 6.9EYCTCh. 6 - Prob. 6.10EYCTCh. 6 - Prob. 6.11EYCTCh. 6 - Prob. 6.1IECh. 6 - Prob. 6.2IECh. 6 - Prob. 6.3IE
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Jessie Stores uses the periodic system of calculating inventory. The following information is available for December of the current year when Jessie sold 500 units of inventory. Using the FIFO method, calculate Jessies inventory on December 31 and its cost of goods sold for December. RE7-11 Using the information from RE7-10, calculate Jessie Storess inventory on December 31 and its cost of goods sold for December using the LIFO method.arrow_forwardJessie Stores uses the periodic system of calculating inventory. The following information is available for December of the current year when Jessie sold 500 units of inventory. Using the FIFO method, calculate Jessies inventory on December 31 and its cost of goods sold for December.arrow_forwardGolden Eagle Company began operations on April 1 by selling a single product. Data on purchases and sales for the year are as follows: Purchases: Sales: The president of the company, Connie Kilmer, has asked for your advice on which inventory cost flow method should be used for the 32,000-unit physical inventory that was taken on December 31. The company plans to expand its product line in the future and uses the periodic inventory system. Write a brief memo to Ms. Kilmer comparing and contrasting the LIFO and FIFO inventory cost flow methods and their potential impacts on the companys financial statements.arrow_forward
- Review the following transactions, and prepare any necessary journal entries for Sewing Masters Inc. A. On October 3, Sewing Masters Inc. purchases 800 yards of fabric (Fabric Inventory) at $9.00 per yard from a supplier, on credit. Terms of the purchase are 1/5, n/40 from the invoice date of October 3. B. On October 8, Sewing Masters Inc. purchases 300 more yards of fabric from the same supplier at an increased price of $9.25 per yard, on credit. Terms of the purchase are 5/10, n/20 from the invoice date of October 8. C. On October 18, Sewing Masters pays cash for the amount due to the fabric supplier from the October 8 transaction. D. On October 23, Sewing Masters pays cash for the amount due to the fabric supplier from the October 3 transaction.arrow_forwardSelected data on merchandise inventory, purchases, and sales for Celebrity Tan Co. and Ranchworks Co. are as follows: Instructions 1. Determine the estimated cost of the merchandise inventory of Celebrity Tan Co. on August 31 by the retail method, presenting details of the computations. 2. a. Estimate the cost of the merchandise inventory of Ranchworks Co. on November 30 by the gross profit method, presenting details of the computations. b. Assume that Ranchworks Co. took a physical inventory on November 30 and discovered that 369,750 of merchandise was on hand. What was the estimated loss of inventory due to theft or damage during March through November?arrow_forwardPalisade Creek Co. is a merchandising business that uses the perpetual inventory system. The account balances for Palisade Creek Co. as of May 1, 2016 (unless otherwise indicated), are as follows: During May, the last month of the fiscal year, the following transactions were completed: Instructions 1. Enter the balances of each of the accounts in the appropriate balance column of a four-column account. Write Balance in the item section, and place a check mark () in the Posting Reference column. Journalize the transactions for July, starting on Page 20 of the journal. 2. Post the journal to the general ledger, extending the month-end balances to the appropriate balance columns after all posting is completed. In this problem, you are not required to update or post to the accounts receivable and accounts payable subsidiary ledgers. 3. Prepare an unadjusted trial balance. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete (5) and (6). 5. (Optional) Enter the unadjusted trial balance on a 10-column end-of-period spreadsheet (work sheet), and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 22 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a statement of owners equity, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on Page 23 of the journal. Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. Insert the new balance in the owners capital account. 10. Prepare a post-closing trial balance.arrow_forward
- can you please check to see if i did the journal entries correctly? The following inventory transactions occurred at Zapata, Inc., which uses a perpetual inventory system: October 2 Purchased 50 units of inventory from a supplier on credit. The goods cost $30 each and the credit terms were 2/10, n/30. The shipping costs were $100 under the terms FOB destination and Zapata received the inventory on October 3rd. October 4 Returned 5 units of inventory from the October 2nd transaction to the supplier. October 6 Sold 15 of the units purchased on October 2nd for $50 each to customers for cash. October 7 October 10 Accepted a return of one unit of inventory from an October 6th customer for a cash refund. Established a petty cash fund for $300. October 11 October 15 October 28 Paid the supplier for one-half of the inventory purchased on October 2nd, net of any returns. Used $20 out of petty cash to pay for stamps (postage expense). Purchased 10 units of…arrow_forwardDuring the month of June, Ace Incorporated purchased goods from two suppliers. The sequence of events was as follows: June 3 Purchased goods for $4,100 from Diamond Incorporated with terms 2/10, n/30. June 5 Returned goods costing $1,100 to Diamond Incorporated for credit on account. June 6 Purchased goods from Club Corporation for $1,000 with terms 2/10, n/30. June 11 Paid the balance owed to Diamond Incorporated. June 22 Paid Club Corporation in full. Required: Assume that Ace uses a perpetual inventory system and that the company had no inventory on hand at the beginning of the month. Calculate the cost of inventory as of June 30.arrow_forwardWhispering Winds Corp. markets CDs of numerous performing artists. At the beginning of March, Whispering Winds had in beginning inventory 2,800 CDs with a unit cost of $8. During March, Whispering Winds made the following purchases of CDs. March 5 2,000 @ $9 March 21 5,200 @ $11 March 13 4,000 @ $10 March 26 2,000 @ $12 During March 11,900 units were sold. Whispering Winds uses a periodic inventory system. Determine the cost of goods available for sale. The cost of goods available for sale $enter the cost of goods available for sale in dollars Calculate Average Cost. (Round answer to 3 decimal places, e.g. 5.125.) Average Cost $enter an average cost in dollars Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). (Round answers to 0 decimal places, e.g. 125.) FIFO LIFO AVERAGE-COST The ending…arrow_forward
- can you help me write journal entries for these transactions please... The following inventory transactions occurred at Zapata, Inc., which uses a perpetual inventory system: October 2 Purchased 50 units of inventory from a supplier on credit. The goods cost $30 each and the credit terms were 2/10, n/30. The shipping costs were $100 under the terms FOB destination and Zapata received the inventory on October 3rd. October 4 Returned 5 units of inventory from the October 2nd transaction to the supplier. October 6 Sold 15 of the units purchased on October 2nd for $50 each to customers for cash. October 7 October 10 Accepted a return of one unit of inventory from an October 6th customer for a cash refund. Established a petty cash fund for $300. October 11 October 15 October 28 Paid the supplier for one-half of the inventory purchased on October 2nd, net of any returns. Used $20 out of petty cash to pay for stamps (postage expense). Purchased 10 units…arrow_forwardGenuine Accessories Inc. uses a perpetual inventory system and records purchases at the net cost and sales at gross invoice price. The following are recent merchandising transactions:Mar. 6 Purchased 60 machines from Village Hardware on account. Invoice price, $350 per unit. The terms of purchase were 3/10, n/30. Mar. 11 Sold 15 of these machines on account for $525 each to White Electric Inc. (2/10, n/60).Mar. 16 Collected cash within the discount period. Mar. 19 Paid in cash to Village Hardware. Payment was made after discount period. Mar. 25 3 units were returned by White Electric Inc. d. The income statement of a merchandising company includes a major type of cost that does notappear in the income statement of a service type business. Identify the cost and explain what it represents. e. In your opinion which companies prefer perpetual inventory system over periodic to record theinventory related transactions and which companies do the opposite. Furthermore, why do you think that…arrow_forwardGenuine Accessories Inc. uses a perpetual inventory system and records purchases at the net cost and sales at gross invoice price. The following are recent merchandising transactions:Mar. 6 Purchased 60 machines from Village Hardware on account. Invoice price, $350 per unit. The terms of purchase were 3/10, n/30. Mar. 11 Sold 15 of these machines on account for $525 each to White Electric Inc. (2/10, n/60).Mar. 16 Collected cash within the discount period. Mar. 19 Paid in cash to Village Hardware. Payment was made after discount period. Mar. 25 3 units were returned by White Electric Inc. a. Prepare journal entries to record these transactions. b. Assume that Genuine Accessories did pay Village Hardware within the discount period. Prepare journal entries to record this payment assuming that the original liability had been recorded at Net cost and at Gross invoice price. c. Hensley Inc. is a retailer of dentistry equipment. You are told that Hensley’s ending inventory is $258,000 and…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
Job Cost Sheet - Job Cost Accounting System; Author: Accounting Instruction, Help, & How To;https://www.youtube.com/watch?v=ElD8nKNXE1I;License: Standard Youtube License