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Required Before you begin, print out all the pages in this workbook. Northgate Products Corp. sells gadgets and uses the perpetual inventory system. During the month of January 2019, the number of...

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Required
    Before you begin, print out all the pages in this workbook.
    Northgate Products Corp. sells gadgets and uses the perpetual inventory system. During the month of January 2019, the number of gadgets purchased and sold was as follows:                                                    To try a new version of the problem, click on Formulas>Calculate Now in the menu bar above or press the F9 button.
        Purchased            Sold                Balance in inventory
    Date    Units    Unit cost    Total $    Units        Unit cost    Total $    Units    Unit cost    Total $
    Jan. 1                                100    $2
    3    400    $4
    8    700    $5
    10                200    *
    15    500    $8
    20                400    **
    27    400    $7
    Units were sold for the following amount:
        June 10        $11
        June 27        $13
    *for specific identification, units sold on June 10 came from:
        Opening inventory        0
     Jan. 3 purchase            0
     Jan. 8 purchase            200
                200
    **for specific identification, units sold on June 20 came from:
     Opening inventory            0
     Jan. 3 purchase            0
     Jan. 8 purchase            0
     Jan. 15 purchase            400
                400
    Required:
    1    Complete the applicable inventory record card, and calculate cost of goods sold and the cost of ending inventory under each of the following inventory cost flow assumptions:
        a. FIFO
        b. LIFO
        c. Specific identification
        d. Weighted average.
    2    Prepare the journal entries required to record purchases and sales using the FIFO inventory cost flow assumption. Descriptions are not necessary.
    3    Refer to the "Compare" page. Calculate the sum of cost of goods sold and ending inventory balances under each of the four inventory cost flow assumptions. Explain the results.
FIFO
    1.a. FIFO
        Goods Purchased            Cost of Goods Sold            Balance in Inventory
    Date    Units    Unit Cost    Total $    Units    Unit Cost    Total $    Units    Unit Cost    Total $
    Jan. 1                            200    $2
    3    400    $4
    8    700    $5
    10
    15    500    $8
    20
    27    400    $7
        Total COGS
LIFO
    1.b. LIFO
        Goods Purchased            Cost of Goods Sold            Balance in Inventory
    Date    Units    Unit Cost    Total $    Units    Unit Cost    Total $    Units    Unit Cost    Total $
    Jan. 1                            100    $2
    3    400    $4
    8    700    $5
    10
    15    500    $8
    20
    27    400    $7
        Total COGS
Spec. Ident.
    1.c. Specific identification
        Goods Purchased            Cost of Goods Sold            Balance in Inventory
    Date    Units    Unit Cost    Total $    Units    Unit Cost    Total $    Units    Unit Cost    Total $
    Jan. 1                            100    $2
    3    400    $4
    8    700    $5
    10
    15    500    $8
    20
    27    400    $7
        Total COGS
Wtd. Avg.
    1.d. Weighted average
        Goods Purchased            Cost of Goods Sold            Balance in Inventory
    Date    Units    Unit Cost    Total $    Units    Unit Cost    Total $    Units    Unit Cost    Total $
    Jan. 1                            100    $2.00
    3    400    $4.00
    8    700    $5.00
    10
    15    500    $8.00
    20
    27    400    $7.00
Jnl. Entries
    Northgate Products Corp
    GENERAL JOURNAL
    Dec.
    2019    Description    Debit    Credit
Compare
        3. COGS plus ending inventory
                FIFO                Spec. Ident.        Wtd. Avg.
                        LIFO
        COGS
        Ending Inv.
        Total
Ans. Pt. 1a
    1.a. FIFO
        Goods Purchased            Cost of Goods Sold            Balance in Inventory
    Date    Units    Unit Cost    Total $    Units    Unit Cost    Total $    Units    Unit Cost    Total $
    Jan. 1                            100    $2    $200
    3    400    $4    $1,600                100    $2    $1,800
                                400    $4
    8    700    $5    $3,500                100    $2    $5,300
                                400    $4
                                700    $5
    10                100    $2    $600    0    $2    $4,700
                    100    $4        300    $4
                    0    $5        700    $5
    15    500    $8    $4,000                0    $2    $8,700
                                300    $4
                                700    $5
                                500    $8
    20                0    $2    $1,700    0    $2    $7,000
                    300    $4        0    $4
                    100    $5        600    $5
                    0    $8        500    $8
    27    400    $7    $400                0    $2    $9,800
                                0    $4
                                600    $5        Ending inventory
                                500    $8
                                400    $7
        Total COGS                    $2,300
Ans. Pt. 1
    1.b. LIFO
        Goods Purchased            Cost of Goods Sold            Balance in Inventory
    Date    Units    Unit Cost    Total $    Units    Unit Cost    Total $    Units    Unit Cost    Total $
    Jan. 1                            100    $2    $200
    3    400    $4    $1,600                100    $2    $1,800
                                400    $4
    8    700    $5    $3,500                100    $2    $5,300
                                400    $4
                                700    $5
    10                0    $2    $1,000    100    $2    $4,300
                    0    $4        400    $4
                    200    $5        500    $5
    15    500    $8    $4,000                100    $2    $8,300
                                400    $4
                                500    $5
                                500    $8
    20                -200    $2    $2,800    300    $2    $5,500
                    0    $4        400    $4
                    0    $5        500    $5
                    400    $8        100    $8
    27    400    $7    $2,800                300    $2    $8,300
                                400    $4
                                500    $5        Ending inventory
                                100    $8
                                400    $7
        Total COGS                    $3,800
Ans. Pt. 1c
    1.c. Specific identification
        Purchased            Sold            Balance in Inventory
    Date    Units    Unit Cost    Total $    Units    Unit Cost    Total $    Units    Unit Cost    Total $
    Jan. 1                            100    $2    $200
    3    400    $4    $1,600                100    $2    $1,800
                                400    $4
    8    700    $5    $3,500                100    $2    $5,300
                                400    $4
                                700    $5
    10                0    $2    $1,000    100    $2    $4,300
                    0    $4        400    $4
                    200    $5        500    $5
    15    500    $8    $4,000                100    $2    $8,300
                                400    $4
                                500    $5
                                500    $8
    20                0    $2    $3,200    100    $2    $5,100
                    0    $4        400    $4
                    0    $5        500    $5
                    400    $8        100    $8
    27    400    $7    $2,800                100    $2    $7,900
                                400    $4
                                500    $5        Ending inventory
                                100    $8
                                400    $7
        Total COGS                    $4,200
Ans. Pt. 1d
    1.d. Weighted average
        Goods Purchased            Cost of Goods Sold            Balance in Inventory
    Date    Units    Unit Cost    Total $    Units    Unit Cost    Total $    Units    Unit Cost    Total $
    Jan. 1                            100    $2.00    $200
    3    400    $4.00    $1,600                500    $3.60    $1,800
    8    700    $5.00    $3,500                1200    $4.42    $5,300
    10                200    $4.42    $883    1000    $4.42    $4,417
    15    500    $8.00    $4,000                1500    $5.61    $8,417
    20                400    $5.61    $2,244    1100    $5.61    $6,172
    27    400    $7.00    $2,800                1500    $5.98    $8,972    Ending inventory
        Total COGS                    $3,128
Ans. Pt. 2
    2. FIFO journal entries
        No journal entry necessary to record opening inventory.
    Jan. 3    Merchandise Inventory    1,600
         Accounts Payable        1,600
    8    Merchandise Inventory    3,500
         Accounts Payable        3,500
    10    Accounts Receivable    2,200
         Sales        2,200    *
        Cost of Goods Sold    600
         Merchandise Inventory        600
         Sales calculated as:
         XXXXXXXXXXUnits (a)    200
         XXXXXXXXXXAmount per unit (b)    $11
         XXXXXXXXXXTotal (a) x (b)    2,200    *
    15    Merchandise Inventory    4,000
         Accounts Payable        4,000
    20    Accounts Receivable    5,200
         Sales        5,200    **
        Cost of Goods Sold    1,700
         Merchandise Inventory        1,700
         Sales calculated as:
         XXXXXXXXXXUnits (a)    400
         XXXXXXXXXXAmount per unit (b)    $13
         XXXXXXXXXXTotal (a) x (b)    5,200    **
    27    Merchandise Inventory    400
         Accounts Payable        400
Ans. Pt. 3
        3. COGS plus ending inventory
                FIFO                Spec. Ident.        Wtd. Avg.
                        LIFO
        COGS        $2,300        $3,800        $4,200        $3,128
        Ending Inv.        $9,800        $8,300        $7,900        $8,972
        Total        $12,100        $12,100        $12,100        $12,100
        All the totals are the same. Different inventory cost flow assumptions merely change the allocation of cost of goods available for sale between cost of goods sold and ending inventory.
Copyright
        Copyright © 2018 David Annand
        Published by David Annand
        Box 308, Rochester AB T0G 1Z0
        ISBN: XXXXXXXXXX
        Li
ary and Archives Canada Cataloguing in Publication
        Annand, David, 1954–
        This case is licensed under a Creative Commons License, Attribution–Non-commercial–Share Alike 4.0 USA see www.creativecommons.org. This material may be reproduced for non-commercial purposes and changes may be used by others provided that credit is given to the author.
        To obtain permission for uses beyond those outlined in the Creative Commons license, such as personalized assignments for students, please contact David Annand at XXXXXXXXXX.
        Latest version available at https:
open.bccampus.ca/find-open-textbooks
        Please forward suggested changes to XXXXXXXXXX.
        First US Edition
        July 31, 2018

Required
        Before you begin, print out all the pages in this workbook.
        Gibson Energy Ltd.'s general ledger account for Cash in Bank showed the following at December 31, 2019:
                                            To try a new version of the problem, click on Formulas>Calculate Now in the menu bar above or press the F9 button.
                Cash in Bank                    Acct. No. 101
                                    Balance DR (CR)
        Date        Description        Folio    Debit    Credit
        Nov. 30        Balance (overdraft)                    157,000
        Dec. 1-31        Cash receipts        CRJ10    854,000        1,011,000
        Dec. 1-31        Cash Payments        CDJ21        936,000    75,000
                December deposits made and checks issued were as follows:
                Deposits            Checks
                Date    Amount        No.    Amount
                Dec. 5    27,000        232    300,000
                7    250,000        233    82,000
                9    73,000        234    37,000
                12    12,000        235    84,000
                15    33,000        236    333,000
                21    436,000        237    12,000
                24    31,000        238    20,000
                26    73,000        239    80,000
                28    27,000
                31    29,000
                    $854,000            $936,000
                The December bank statement showed:
                First Chartered Bank
                Gibson Energy Ltd. Bank Statement
                Month Ended December 31, 2019
                Date    Type    Out    In    Balance
                Dec. 3    Deposit        90,000    122,000
                4    NR XYZ Corp.        70,000    192,000
                5    Ck. 232    300,000        (108,000)
                6    Ck. 231    90,000        (198,000)
                6    Deposit        27,000    (171,000)
                7    Deposit        250,000    79,000
                10    Ck. 234    37,000        42,000
                12    Ck. 236    333,000        (291,000)
                13    Deposit        12,000    (279,000)
                14    Ck. 52094*    71,000        (350,000)
                14    NSF ABC. Inc.    6,000        (356,000)
                15    Deposit        33,000    (323,000)
                16    Ck. 238    20,000        (343,000)
                17    Deposit        436,000    93,000
                18    Ck. 235    84,000        9,000
                20    Ck. 237    12,000        (3,000)
                24    Deposit        31,000    28,000
                26    Deposit        73,000    101,000
                28    Deposit        27,000    128,000
                31    OD int    1,480        126,520
                31    SC    70        126,450
                *drawn in e
or on Gibson's bank account
                NR = note receivable collected from XYZ Corp. including interest of:
                                $1,707
                NSF = not sufficient funds
                SC = service charge
                OD int = overdraft interest expense
                Outstanding items at November 30, 2019 were as follows:
                    Nov. 30 deposit        $90,000
                    Ck. 231        $90,000
            Required:
            1    Complete the bank reconciliation at December 31, 2019.
            2    Prepare the adjusting journal entries required to make the Cash in Bank account in the general ledger agree with the adjusted cash balance on the December 31 bank reconciliation. Include descriptions.
Bank Rec.
            Gibson Energy Ltd.
            Bank Reconciliation
            At December 31, 2019
        Unreconciled general ledger Cash balance at Dec. 31                            Unreconciled bank statement balance at Dec. 31
            Add:                            Add:
            Less:                            Less:
            Adjusted general ledger Cash balance at Dec. 31                            Adjusted bank balance at Dec. 31
Jnl. Entries
    Gibson Energy Ltd.
    GENERAL JOURNAL
    Dec.
    2019    Description    PR    Debit    Credit
Ans. Pt. 1
            Gibson Energy Ltd.
            Bank Reconciliation
            At December 31, 2019
        Unreconciled general ledger Cash balance at Dec. 31                        Unreconciled bank statement balance at Dec. 31
                        $75,000                    $126,450
                                    Add: Outstanding deposits
            Add:                        Dec. 9    73,000
             Note rec. - XYZ Corp.            70,000            Dec. 31    29,000    102,000
                                    Add: Check drawn in e
or        71,000
            Less:                        Less: Oustanding checks
             NSF check        (6,000)                Check No.    Amount
             Overdraft Interest        (1,480)                233    (82,000)
             Bank charges        (70)    (7,550)            239    (80,000)    (162,000)
            Adjusted general ledger Cash balance at Dec. 31                        Adjusted bank balance at Dec. 31
                        $137,450                    $137,450
Ans. Pt. 2
    2. Adjusting journal entries
        Dec. 31    Cash                70,000
             Note receivable - XYZ Corp.                    68,293
             Interest income*                    1,707
            To record receipt of principal and interest on note receivable from XYZ Corp.
            *or possibly Interest Receivable, if this was set up in a prior period.
        Dec. 31    Acct. Receivable - ABC Inc.                6,000
             Cash                    6,000
            To record NSF check from ABC Inc.
        Dec. 31    Bank charges expense                1,550
             Cash                    1,550
            To record service charges and interest for December per the bank statement.
Copyright
        Copyright © 2018 David Annand
        Published by David Annand
        Box 308, Rochester AB T0G 1Z0
        ISBN: XXXXXXXXXX
        Li
ary and Archives Canada Cataloguing in Publication
        Annand, David, 1954–
        This case is licensed under a Creative Commons License, Attribution–Non-commercial–Share Alike 4.0 USA see www.creativecommons.org. This material may be reproduced for non-commercial purposes and changes may be used by others provided that credit is given to the author.
        To obtain permission for uses beyond those outlined in the Creative Commons license, such as personalized assignments for students, please contact David Annand at XXXXXXXXXX.
        Latest version available at https:
open.bccampus.ca/find-open-textbooks
        Please forward suggested changes to XXXXXXXXXX.
        First US Edition
        July 31, 2018

Required
    Before you begin, print out all the pages in this workbook.
                                                To try a new version of the problem, click on Formulas>Calculate Now in the menu bar above or press the F9 button.
    The year-end inventory of Goodall Inc. consisted of the following similar groups of items, priced at cost and net realizable value:
                        LCNRV
    Item    Total cost        Total NRV        Unit basis
    A    $1,000,000        $960,000
    B    $700,000        $735,000
    C    $600,000        $576,000
    D    $800,000        $792,000
    E    $800,000        $840,000
    Required:
    1    Calculate ending inventory based on:
        a. Cost
        b. LCNRV (unit basis)
        c. LCNRV (group basis).
    2    Assume Goodall records its inventory at cost when purchased. Prepare the adjusting journal entry needed at year end to reduce the inventory value to LCNRV (unit basis).
Answe
    1. LCNRV calculations:
                        LCNRV
    Item    Total cost        Total NRV        Unit basis
    A    $1,000,000        $960,000        $960,000
    B    700,000        735,000        700,000
    C    600,000        576,000        576,000
    D    800,000        792,000        792,000
    E    800,000        840,000        800,000
        $3,900,000        $3,903,000        $3,828,000
    2. Year-end adjusting entry:
        Cost of Goods Sold                72,000
         Merchandise Inventory            0        72,000
        To write-down inventory at year-end to LCNRV as follows:
        Merchandise inventory should be                    $3,828,000
        Merchandise inventory at
Answered Same Day Jun 21, 2021

Solution

Kiran answered on Jun 21 2021
127 Votes
Required
    Before you begin, print out all the pages in this workbook.
    Northgate Products Corp. sells gadgets and uses the perpetual inventory system. During the month of January 2019, the number of gadgets purchased and sold was as follows:                                                    To try a new version of the problem, click on Formulas>Calculate Now in the menu bar above or press the F9 button.
        Purchased            Sold                Balance in inventory
    Date    Units    Unit cost    Total $    Units        Unit cost    Total $    Units    Unit cost    Total $
    Jan. 1                                100    $1
    3    500    $3
    8    700    $6
    10                100    *
    15    500    $8
    20                700    **
    27    400    $7
    Units were sold for the following amount:
        June 10        $12
        June 27        $14
    *for specific identification, units sold on June 10 came from:
        Opening inventory        0
     Jan. 3 purchase            0
     Jan. 8 purchase            100
                100
    **for specific identification, units sold on June 20 came from:
     Opening inventory            0
     Jan. 3 purchase            0
     Jan. 8 purchase            300
     Jan. 15 purchase            400
                700
    Required:
    1    Complete the applicable inventory record card, and calculate cost of goods sold and the cost of ending inventory under each of the following inventory cost flow assumptions:
        a. FIFO
        b. LIFO
        c. Specific identification
        d. Weighted average.
    2    Prepare the journal entries required to record purchases and sales using the FIFO inventory cost flow assumption. Descriptions are not necessary.
    3    Refer to the "Compare" page. Calculate the sum of cost of goods sold and ending inventory balances under each of the four inventory cost flow assumptions. Explain the results.
FIFO
    1.a. FIFO
        Goods Purchased            Cost of Goods Sold            Balance in Inventory
    Date    Units    Unit Cost    Total $    Units    Unit Cost    Total $    Units    Unit Cost    Total $
    Jan. 1                            200    $2    $400
    3    500    $3    $1,500                200    $2    $1,900
                                500    $3
    8    700    $6    $4,200                200    $2    $6,100
                                500    $3
                                700    $6
    10                100    $2    $200    100    $2    $5,900
                    0    $3        500    $3
                    0    $6        700    $6
    15    500    $8    $4,000                100    $2    $9,900
                                500    $3
                                700    $6
                                500    $8
    20                100    $2    $2,300    0    $2    $7,600
                    500    $3        0    $3
                    100    $6        600    $6
                    0    $8        500    $8
    27    400    $7    $2,800                0    $2    $10,400
                                0    $3
                                600    $6
                                500    $8
                                400    $7
        Total COGS                    $2,500            $10,400
LIFO
    1.b. LIFO
        Goods Purchased            Cost of Goods Sold            Balance in Inventory
    Date    Units    Unit Cost    Total $    Units    Unit Cost    Total $    Units    Unit Cost    Total $
    Jan....
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