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