Important Topics ABD
Q1: (a) Ethics and (b) sustainability
Q2: Preparing income statement
E XXXXXXXXXXPractice week 9 home work questions
Q3: Making dropping a product and product mix decisions
S XXXXXXXXXXPractice week 10 home work questions (All)
Q4: Perpetual inventory—FIFO, LIFO and average method
E6-7 &E XXXXXXXXXXPractice week 8 home work questions (All)
Q5: Perpetual inventory – Journal entries
E XXXXXXXXXXPractice week 7 home work questions (All)
(5–10 min.) S22-4
Req. 1
DEELA FASHIONS
Analysis of dropping the Accessories Department
Expected decrease in revenues
$ XXXXXXXXXX)
Expected decrease in expenses:
Expected variable expenses
$ 92 000
Expected fixed expenses
XXXXXXXXXX
Expected decrease in total expenses
XXXXXXXXXX
Expected increase in profit
$ XXXXXXXXXX
Deela Fashions should drop the Accessories Department because relevant expenses are greater than the revenues, which will result in an increase in profit if the department is dropped.
(15 min.) E19-3
Req. 1
SNYDER BRUSH COMPANY LTD
Income statement
for the year ended 31 December 2016
Sales revenue
$138 000
Cost of sales:
Beginning inventory
$ 7 500
Purchases
XXXXXXXXXX
Cost of goods available for sale
$85 500
Ending inventory
(12 360)
Cost of sales
73 140
Gross profit
$64 860
Selling and administrative
expenses
49 680
Profit
$15 180
Req. 2
Unit cost of one hair
ush = total cost of sales ÷ total number of
ushes sold
$73 140 ÷ 6 000 = $12.19 cost per
ush
(5–10 min.) E6-7
Req. 1
DOLLS
FIFO
Purchases
Cost of sales
Inventory on hand
Date
Quantity
Unit
cost
Total
cost
Quantity
Unit
cost
Total
cost
Quantity
Unit
cost
Total
cost
Beg.
13
$11
$143
Sale
9
11
$99
4
11
44
Purchase
4
11
44
17
13
$221
17
13
221
Sale
4
11
44
9
13
117
8
13
104
Totals
17
$221
22
$260
8
$104
Req. 2
DOLLS
LIFO
Purchases
Cost of sales
Inventory on hand
Date
Quantity
Unit
cost
Total
cost
Quantity
Unit
cost
Total
cost
Quantity
Unit
cost
Total
cost
Beg.
13
$11
$143
Sale
9
$11
$99
4
11
44
Purchase
4
11
44
17
$13
$221
17
13
221
Sale
13
13
169
4
11
44
4
13
52
Totals
17
$221
22
$268
8
$96
Req. 3
The method with the higher cost of ending inventory is FIFO.
(20–25 min.) E6-3
Req. 1
GOLF HAVEN
FIFO
Purchases
Cost of sales
Inventory on hand
Date
Quantity
Unit
cost
Total
cost
Quantity
Unit
cost
Total
cost
Quantity
Unit
cost
Total
cost
Nov 1
17
$68
$1 156
Nov 6
7
$68
$476
10
68
680
Nov 8
XXXXXXXXXX
$74
1 480
10
20
68
74
680
1 480
Nov 17
10
68
680
10
74
740
10
74
740
Nov 30
4
74
296
6
74
444
Totals
20
$1 480
31
$2 192
6
$444
The cost of sales using the FIFO method is $2 192.
Ending inventory balance using the FIFO method is $444.
(20–25 min) E6-5
Req. 1
GOLF HAVEN
Average cost
Purchases
Cost of sales
Inventory on hand
Date
Quantity
Unit
cost
Total
cost
Quantity
Unit
cost
Total
cost
Quantity
Unit
cost
Total
cost
Nov 1
17
$68
$1 156
Nov 6
7
$68
$476
10
68
680
Nov 8
20
$74
$1 480
30
72
2 160
Nov 17
20
72
1 440
10
72
720
Nov 30
4
72
288
6
72
432
Totals
20
$1 480
31
$2 204
6
$432
The cost of sales using the average-cost method is $2 204.
Ending inventory on hand balance using the average-cost method is $432.
(15–20 min.) E5-5
Req. 1
Journal
DATE
ACCOUNTS AND EXPLANATIONS
POST. REF.
DEBIT
CREDIT
Fe
3
Inventory
2 700
GST clearing
270
Accounts payable
2 970
7
Accounts payable
440
Inventory
400
GST clearing
40
9
Inventory
110
GST clearing
11
Cash
121
10
Accounts receivable
4 785
Sales revenue
4 350
GST clearing
435
10
Cost of sales
2 300
Inventory
2 300
12
Accounts payable ($2 970 − $440)
2 530
Inventory ($2 530 × .04)
92
GST clearing
9
Cash ($2 530 − $101)
2 429
16
Sales returns and allowances
500
GST clearing
50
Accounts receivable
550
23
Cash ($4 235 − $84)
4 151
Sales discounts ($3 850 × .02)
77
GST clearing
7
Accounts receivable ($4 785 − $550)
4 235
4785 – 550 = 4235
XXXXXXXXXX4235 x 0.02 = 84
XXXXXXXXXX84 / 11 = XXXXXXXXXX – 7 = 77
XXXXXXXXXX4235 – 84 = 4151
Important Topics ABD
Q1: (a) Ethics and (b) sustainability
Q2: Preparing income statement
E XXXXXXXXXXPractice week 9 home work questions
Q3: Making dropping a product and product mix decisions
S XXXXXXXXXXPractice week 10 home work questions (All)
Q4: Perpetual inventory—FIFO, LIFO and average method
E6-7 &E XXXXXXXXXXPractice week 8 home work questions (All)
Q5: Perpetual inventory – Journal entries
E XXXXXXXXXXPractice week 7 home work questions (All)
(5–10 min.) S22-4
Req. 1
DEELA FASHIONS
Analysis of dropping the Accessories Department
Expected decrease in revenues
$ XXXXXXXXXX)
Expected decrease in expenses:
Expected variable expenses
$ 92 000
Expected fixed expenses
XXXXXXXXXX
Expected decrease in total expenses
XXXXXXXXXX
Expected increase in profit
$ XXXXXXXXXX
Deela Fashions should drop the Accessories Department because relevant expenses are greater than the revenues, which will result in an increase in profit if the department is dropped.
(15 min.) E19-3
Req. 1
SNYDER BRUSH COMPANY LTD
Income statement
for the year ended 31 December 2016
Sales revenue
$138 000
Cost of sales:
Beginning inventory
$ 7 500
Purchases
XXXXXXXXXX
Cost of goods available for sale
$85 500
Ending inventory
(12 360)
Cost of sales
73 140
Gross profit
$64 860
Selling and administrative
expenses
49 680
Profit
$15 180
Req. 2
Unit cost of one hair
ush = total cost of sales ÷ total number of
ushes sold
$73 140 ÷ 6 000 = $12.19 cost per
ush
(5–10 min.) E6-7
Req. 1
DOLLS
FIFO
Purchases
Cost of sales
Inventory on hand
Date
Quantity
Unit
cost
Total
cost
Quantity
Unit
cost
Total
cost
Quantity
Unit
cost
Total
cost
Beg.
13
$11
$143
Sale
9
11
$99
4
11
44
Purchase
4
11
44
17
13
$221
17
13
221
Sale
4
11
44
9
13
117
8
13
104
Totals
17
$221
22
$260
8
$104
Req. 2
DOLLS
LIFO
Purchases
Cost of sales
Inventory on hand
Date
Quantity
Unit
cost
Total
cost
Quantity
Unit
cost
Total
cost
Quantity
Unit
cost
Total
cost
Beg.
13
$11
$143
Sale
9
$11
$99
4
11
44
Purchase
4
11
44
17
$13
$221
17
13
221
Sale
13
13
169
4
11
44
4
13
52
Totals
17
$221
22
$268
8
$96
Req. 3
The method with the higher cost of ending inventory is FIFO.
(20–25 min.) E6-3
Req. 1
GOLF HAVEN
FIFO
Purchases
Cost of sales
Inventory on hand
Date
Quantity
Unit
cost
Total
cost
Quantity
Unit
cost
Total
cost
Quantity
Unit
cost
Total
cost
Nov 1
17
$68
$1 156
Nov 6
7
$68
$476
10
68
680
Nov 8
XXXXXXXXXX
$74
1 480
10
20
68
74
680
1 480
Nov 17
10
68
680
10
74
740
10
74
740
Nov 30
4
74
296
6
74
444
Totals
20
$1 480
31
$2 192
6
$444
The cost of sales using the FIFO method is $2 192.
Ending inventory balance using the FIFO method is $444.
(20–25 min) E6-5
Req. 1
GOLF HAVEN
Average cost
Purchases
Cost of sales
Inventory on hand
Date
Quantity
Unit