BA211 Homework Packet Ch 6 - Solutions

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Oregon State University, Corvallis *

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211

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Business

Date

May 18, 2024

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pdf

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t BA 211 | Pesch | Homework Packet #h8 oreponstateuniversity Chapter 6 College of Business Problem #1 Portage Retail Group begins the year with inventory of $64,000 and ends the year with inventory of $54,000. During the year, the company has four purchases for the following amounts. Purchase on February 17 $219,000 Purchase on May 6 139,000 Purchase on September 8 169,000 Purchase on December 4 419,000 Required: Calculate cost of goods sold for the year. Lo cvt'vl“o ry RG # (4,000 2/ G voO ‘5/[, | 19, s00 1)¢ /bd. 800 Solve Lor Aswes fy Ly14, 000 1/ 27 COGS § dne 1261 Student name:

BA 211 | Homework Packet dpASa) Oregon StateUniversity Chapter 6 59 College of Business Problem #2 Wayman Corporation reports the following amounts in its December 31, 2024, income statement. Sales revenue $418,000 Income tax expense $54,000 Interest expense 24,000 - Cost of goods sold 134,000 Salaries expense 44,000 Advertising expense 34,000 Utilities expense 54,000 Required: Prepare a multiple-step incorrie ksj?fingffj Corpam%—?é o Toe me Sheteanen Decewhay 31, Jooud Sles Revensie diyyg, oo CD'&} D-Q C\oe‘ﬂs S)Ul _w Gvose Pro it 284,000 Su\avi?x E*‘PQM& Uy | 900 DA Ldres Bwpeay 5, s00 Operal ng Juncoml /€2,000 Iw\e‘/e\* L:\q)w»\'t L o0 e Pre Ta w Tucome ‘ 28, 000 Tay Evpene 54 00O /Ue_~\ Tucome- Page | 2

BA 211 | Homework Packet Chapter 6 Problem #3 — Part A During the year, TRC Corporation has the following inventory transactions. 0 Oregon State University % College of Business January 1 Beginning inventory 60 $52 $3,120 April 7 Purchase 140 54 7,560 July 16 Purchase 210 57 11,970 October 6 Purchase 120 58 6,960 E . . . 29,610 or the entire year, the company sells 450 units of inventory for $70 each. Calculate: * Goods Available for Sale & Ending Inventory, using FIFO ( Lol S\) Cokms taqo EV\&Iwé_jva‘(bfa_ H tuo ( B0 « 5‘3\ = Sales & Gross Profit, using FIFO . A o Sales 3l.s00 COhS 24,970 Gvon bk {.530 e Page | 3

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BA 211 | Homework Packet 8\ OregonstateUniversity Chapter 6 College of Business Problem #3 — Part B During the year, TRC Corporation has the following inventory transactions. - Transaction eginning inventory Purchase 54 7,560 Purchase 210 57 11,870 October 6 Purchase 120 58 6,960 24,610 For the entire year, the company sells 450 units of inventory for $70 each. Calculate: * Goods Available for Sale & Ending Inventory, using LIFO instead of FIFO [oos) Co6s 25 410 O *EY e joBo EV\LQM}EWU(VL“og’ /—" 100 é{ao 82 = RIPE = Sales & Gross Profit, using LIFO instead of FIFO Seleg * 2, 00 Hi O (0068 fiir_____.. Grosshebid & 090 e / Page | 4

BA 211 | Homework Packet Chapter 6 Problem #4 — Part A Oregon State University College of Business The $46,000 beginning balance of inventory consists of 460 units, each costing $100. During January 2024, Big Blast Fireworks had the following inventory transactions: January 3 January 8 January 12 January 15 January 19 January 22 Janunary 24 Purchase 1,450 units for $158,050 on account ($109 each). Purchase 1,550 units for $176,700 on account ($114 each). Purchase 1,650 units for $196,350 on account ($119 each). Return 180 of the units purchased on January 12 because of defects. Sell 4,800 units on account for $720,000. The cost of the units sold is determined using a FIFO perpetual inventory system. Receive $705,000 from customers on accounts receivable. Pay $500,000 to inventory suppliers on accounts payable. Complete the table on the next page to show the effect of each transaction on the Cash Flow Statement, Balance Sheet, Net Income and Retained Earnings. Effect on Balance Sheet Effect on Transaction A = L + SE Revenues | Expenses InI::ltlle g::;iir:;‘: 1/3 1 1 e NE Vg Me be 1/8 T 1 NE NE NE ME we 1/12 /7\ T NE NE VE NE VE 1/15 l] } NE- VE VE Ve WE 1/19 (Sale) 7\ NE T 4 pe T o 119 (cogs)| NE NE N Ny v 122 T we WE e VE NE NE 124 \ Y ve NE WE VE | E Page | 5

BA 211 | Homework Packet dpSa) Oregon StateUniversity Chapter 6 College of Business Problem #4 — Part B For the transactions of Big Blast Fireworks shown in Part A, The $46,000 beginning balance of inventory consists of 460 units, each costing $100. During January 2024, Big Blast Fireworks had the following inventory transactions: Y 000 /6D January 3 Purchase 1,450 units for $158,050 on account ($109 each). January 8 Purchase 1,550 units for $176,700 on account ($114 each). January 12 Purchase 1,650 units for $196,350 on account ($119 each). January 15 Return 180 of the units purchased on January 12 because of defects. January 19 Sell 4,800 units on account for $720,000. The cost of the units sold is determined using a FIFO perpetual inventory system. calculate: * Goods Available for Sale, COGS and Ending Inventory ‘To\j Tateerlory- Cobs M L55 660 ' l";"";‘; s 5B o v 174,7°? (170 b8P .08 - ¥ 17k Too TuoM 0 v 143,30 TGS e = Sales Revenue & Gross Profit & . Revguve 720,000 Cous SHo , 240 la b, bass ol 19,990 Page | 6

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BA 211 | Homework Packet A Oregon State University Chapter 6 y College of Business Problem #4 —Part C For the transactions of Big Blast Fireworks shown in Part A, provide the needed Journal Entry below. Accounts Debit Credit jvwcv\“oqa‘ 138, p50 13 o Aicou ke ?ayublrj {L9,050 Iv\wm*lo (7{,700 1/8 % A(,(_,(_))Mv‘k\ (-()(,u,(l,fplf_; [71‘. 700 Iwuzw\ou ¥ IQA 250 1/12 Accuwds Qu yalde (96350 AZQ Cw»w‘ks ?ryi u& l(’_ 2\ ’LLZO 115 . %uewiJv% A 4D 1/19 L\LLD""MS QCL@: 4)(/_(7/@/ 701() '();)L) Sale ) Gl Rewure. TA0,000 e | COGS 510 210 (COGS) T { wiew org 540, 240 1/22 NA 1/24 ’V//*\/ Page | 7

BA 211 | Homework Packet Chapter 6 Oregon State University College of Business Problem #4 — Part D For the transactions of Big Blast Fireworks shown in Part A, The $46,000 beginning balance of inventory consists of 460 units, each costing $100. During January 2024, Big Blast Fireworks had the following inventory transactions: N0 Hb O 100 January3 Purchase 1,450 units for $158,050 on account ($109 each). January 8 Purchase 1,550 units for $176,700 on account ($114 each). January 12 Purchase 1,650 units for $196,350 on account ($119 each). January 15 Return 180 of the units purchased on January 12 because of defects. January 19 Sell 4,800 units on account for $720,000. The cost of the units sold is determined using a FIFO perpetual inventory system. calculate: = Goods Available for Sale & Ending Inventory, using LIFO instead of FIFO Ve - Aecs o : - Todeud Mw‘-\o\a" 555.6%0 'E\A(JA\V‘&/‘VI(}(?/I”L)F“'} = i 3[2‘0() Y 000 L 188,050 41716 702 4+ 19b 35D 555 650 = Sales Revenue & Gross Profit, using LIFO instead of FIFO H Revemue 120,000 o 177,350 Page | 8

BA 211 | Homework Packet dRea) OregonStateUniversity Chapter 6 College of Business Problem #5 A company like Golf USA that sells golf-related inventory typically will have inventory items such as golf clothing and golf equipment. As technology advances the design and performance of the next generation of drivers, the older models become less marketable and therefore decline in value. Suppose that in the current year, Ping (a manufacturer of golf clubs) introduces the MegaDriver I1, the new and improved version of the MegaDriver. Below are year-end amounts related to Golf USA’s inventory. Shirts MegaDriver MegaDriver 11 360 250 350 420 Calculate the Total recorded Cost of Ending Inventory. Skdds oo Md &Koo WO T 0. 500 BRaead {8,000 Now Calculate the Inventory USING LOWER OF COST OR MARKET (i.e., net realizable value). Swids (2‘“)3 md 3,750 MD IC [0 Fod 14350 If Inventory needs to be written down to NRV, record the entry below, otherwise write None. Accounts Debit Credit AJE CO (5)5 //éS@ LCM anen“ko% /,[,’J—O Page | 9

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BA 211 | Homework Packet AN Chapter 6 Oregon StateUniversity College of Business Problem #6 Below are amounts found in the income statements of three companies. Henry $14,000 $4,200 $4,100 $1,100 Grace 17,000 11,900 6,100 3,100 James 22,000 13,640 2,100 0 Required: 1. For each company, calculate (a) gross profit, (b) operating income, (c) income before income taxes, and (d) net income and gross profit ratio. et Income Net Transaction Gross Operating Before | Income Gross I.’rofit Profit Income Ratio Taxes (Loss) Henry 9,900 | 500 | Hiboo | 3500 | Hotk Grace K100 (i«00°> (‘/.W) [‘“0‘;3 30% James 830 b.2bo [o-)(;() H.leo jg% 2. Which company has the most favorable ratio and what does that mean? /‘)cm\a l/w‘, ‘-h/\i‘ l/d_&he,d é[vv% ”Pragijrr AT mewns Ts dod e cur A More -Cn)WL e ived P‘DJ“JV (‘. Gules \Llww t[’bl.& O‘LVWV ) bve thwee C O aPBetics Gre §im lor o e av/}‘ é{“w{‘s LY Q’,wce we (,Qomil' fens 0 i D»o:k(r ek, Lige, Lt Volomecind tabor Page | 10

aw BA 211 | Homework Packet ) Oregon tateUniversity Chapter 6 College of Business Problem #7 Lewis Incorporated and Clark Enterprises report the following amounts for the year. ewis Clar] Sales 400,000 300,000 Inventory (beginning) $29,000 $55,000 Inventory (ending) 23,000 65,000 Purchases 339,000 177,000 Purchase returns 20,000 65,000 1. Calculate cost of goods sold for each company. lews 325,000 C )u,V“l'L ' 0 9\ ' 000 2. Calculate the gross profit ratio for each company. [eqyy, Moo Clock 300,000 < 325,000 [o. 000 IS E 78, 000 ’3.75% 199 . 00@ é)é % 3. Calculate the inventory turnover & average days in inventory for each company. Lewis D220 2 1.5 ¢u Clav k102,000 A6 200 = 7 3¢5 bo 000 22 2092 4 _ s et 3575. > 2M.7 deyys 1< 4. Using the ratios calculated above, discuss the relative performance of the two companies in terms of profitability and inventory efficiency. T wodd osume dugt clurk sells hiya doflor bigh er” i pwodiek gud does pot sell may bt due o s bigle gross Uheerg i wahes cucug. money Lo shey i busimess. fews Wove duan (zL,(? selle [ods ,3 @a)l»dh d does pot pehe Qs wudt on roeek Oue END OF HOMEWORK PACKET _ YAY! Page | 11

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BA211 Homework Packet Ch 6 - Solutions

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