ch08_sol

InstructionsInstructions for the Microsoft Excel Templates by Rex A SchildhouseBe advised, the template workbooks and worksheets are not protected.Overtyping any data may remove it.

Extensive detail and information is contained within the help function of Microsoft Excel and in the provided text.You should enter your name, date, instructor's name, and course into the cells at the top of the page. This information will be printed on the top of each page if the template requires more than one page.Each template is set to print with File Name, Page # of # Page(s), the print date, and the print time to assist in assembly of multiple pages.

If more than one page is required by the template, manual page breaks have been set to provide consistent presentation.All of the cells have been correctly formatted for presentation and should not require any adjustment. For example, if the text requires one, two, or three significant digits in a presentation, the template has been set for that presentation in the appropriate cells.

In general, the yellow highlighted cells are the cells which work and effort should be presented. These entries may include date(s), account title(s), values, memorandum appropriate to the entry, or text answers to questions.

And information or data which may be required by the solution will be entered in cells with borders to help identify them.Where a yellow highlighted cell shows "Date" enter the appropriate date for that step of the challenge. This may be any date format that Microsoft Excel accepts. Some of these formats include "1/1/12", "01/01/12", and "01/01/2012." All of these will return January 01, 2012, in the format set in the template.

Where a yellow highlighted cell shows "Acct Nbr" enter the appropriate account number, provided in the template and in the text for that step of the challenge. This is entry may be a "Look to" formula to another cell where that information has been provided or previously entered.

Where a yellow highlighted cell shows "Account Title" enter the appropriate account title for that step of the challenge. This is a text entry and most of those cells are set for the proper indentation for that step. Frequently the chart of accounts appropriate to the challenge is provided and you can use the "look to" formula to reference the appropriate account title without typing it.

Check with your instructor to see if abbreviated account titles are acceptable. For example "A/R" for Accounts Receivable, "A/P" for Accounts Payable. If your instructor is using a comparison process between workbooks for grading, these abbreviates may not be acceptable.

Where a yellow highlighted cell shows titles such as "Values," "Amounts," or "Quantities" enter the appropriate numerical value for that step of the challenge. The cell is formatted for proper presentation of the entered information. If a dollar sign is appropriate, it should not be entered, Microsoft Excel will place it there through formatting. Commas and significant digits (decimals) are also set through formatting for common presentation. Since the formatting of the templates is not protected by any password, you may change any of the formatting found in the templates to meet your desires.

Where a yellow highlighted cell shows titles such as "Formula" you may enter the appropriate formula or enter a numerical value appropriate for that step of the challenge. Most of the values necessary for the appropriate formula are located on the template in cells with borders or in other yellow highlighted cells. The formula may be a simple "Look to" formula, an equal sign and a cell reference, "=E27" or more complex as "=E27*5," or something similar to the time-value-of-money formula. These are addressed in the tutorial text provided for Microsoft Excel.

Where a yellow highlighted cell shows "Text" enter the appropriate text for that step of the challenge. This may be a memorandum entry for a journal entry or a lengthy text answer discussing the results of an analysis of a company's financials. These titles can simply be typed over.

Where a yellow highlighted cell shows titles such as "Journal Number" or "Journ #" you should enter the appropriate number provided in the template and in the text for that step of the challenge. In general this will appear in instances such as "Record the following events in General Journal number six."

The print area is defined to fit onto 8 1/2" 11" sheets in portrait or landscape mode as required. Margins are generally set to no less than 1/2" so most printers can print them without a problem. If you printer cannot accept margins less than 1" you may have to reformat the margins through Page Setup.

The display may have "Freeze Pane" invoked so column titles remain visible during data entry. This can be removed by utilizing the View menu and selecting "Unfreeze Panes" under "Freeze Panes."

When negative values are required, enter them by starting with a minus sign, "-". Negative values may be shown as ($400) or -$400. Negative values in formulas can be created by putting a minus sign in front of the cell reference - "=E10*-E11" will return a negative value if both cells E10 and E11 contain positive values.

Microsoft Office and Microsoft Excel are products of, and copyrighted by,Microsoft Corporation, One Microsoft Way, Redmond, Washington 98052-6399

Exercise 8-2 Solution

Name:SolutionDate:Instructor:Course:Intermediate Accounting, 14th Edition by Kieso, Weygandt, and WarfieldPrimer on Using Excel in Accounting by Rex A Schildhouse

E8-2 (Inventoriable Costs) In your audit of Garza Company, you find that a physical inventory on December 31, 2012, showed merchandise with a cost of$441,000was on hand at that date. You also discover the following items were all excluded from the$441,0001. Merchandise of$61,000which is held by Garza on consignment. The consignor is the Bontemps Company.2. Merchandise costing $33,000which was shipped by Garza f.o.b. destination to a customer on December 31, 2012. The customer was expected to receive the merchandise on January 6, 2013.3. Merchandise costing$46,000which was shipped by Garza f.o.b. shipping point to acustomer on December 29, 2012. The customer was scheduled to receive the merchandise onJanuary 2, 2013.4. Merchandise costing$73,000shipped by a vendor f.o.b. destination on December 30, 2012, and received by Garza on January 4, 2013.5. Merchandise costing$51,000shipped by a vendor f.o.b. seller on December 31, 2012and received by Garza on January 5, 2013.

Instructions:Based on the above information, calculate the amount that should appear on Garzas balance sheet at December 31, 2012, for inventory.

Inventory per physical count$441,000Goods in transit to customer, f.o.b. destination33,000Goods in transit from vendor, f.o.b. shipping point51,000Inventory to be reported on balance sheet$525,000

The consigned goods of $61,000 are not owned by Garza and were properly excluded.

The goods in transit to a customer of $46,000, shipped f.o.b. shipping point, are properly excluded from the inventory because the title to the goods passed when they left the seller (Garza) and therefore a sale and related cost of goods sold should be recorded in 2012.

The goods in transit from a vendor of $73,000, shipped f.o.b. destination, are properly excluded from the inventory because the title to the goods does not pass to Garza until the buyer (Garza) receives them.

&F, &A, Page &P of &N, &D, &T

Exercise 8-2

Name:Date:Instructor:Course:Intermediate Accounting, 14th Edition by Kieso, Weygandt, and WarfieldPrimer on Using Excel in Accounting by Rex A Schildhouse

E8-2 (Inventoriable Costs) In your audit of Garza Company, you find that a physical inventory on December 31, 2012, showed merchandise with a cost of$441,000was on hand at that date. You also discover the following items were all excluded from the$441,0001. Merchandise of$61,000which is held by Garza on consignment. The consignor is the Bontemps Company.2. Merchandise costing $33,000which was shipped by Garza f.o.b. destination to a customer on December 31, 2012. The customer was expected to receive the merchandise on January 6, 2013.3. Merchandise costing$46,000which was shipped by Garza f.o.b. shipping point to acustomer on December 29, 2012. The customer was scheduled to receive the merchandise onJanuary 2, 2013.4. Merchandise costing$73,000shipped by a vendor f.o.b. destination on December 30, 2012, and received by Garza on January 4, 2013.5. Merchandise costing$51,000shipped by a vendor f.o.b. seller on December 31, 2012and received by Garza on January 5, 2013.

Instructions:Based on the above information, calculate the amount that should appear on Garzas balance sheet at December 31, 2012, for inventory.

Text TitleAmountText TitleAmountText TitleAmountText TitleFormula

Enter text explain as desire here.




Exercise 8-9 Solution


E8-9 (Periodic versus Perpetual Entries) Chippewas Company sells one product. Presented below is information for January for Chippewas Company.

Jan 1Inventory100units at$6.00eachJan 4Sale80units at$8.00eachJan 11Purchase150units at$6.50eachJan 13Sale120units at$8.75eachJan 20Purchase160units at$7.00eachJan 27Sale100units at$9.00each

Chippewas uses the FIFO cost flow assumption. All purchases and sales are on account.

Instructions:(a) Assume Chippewas uses a periodic system. Prepare all necessary journal entries, including the end-of-month closing entry to record cost of goods sold. A physical count indicates that the

ending inventory for January is110units.

Jan 4Accounts Receivable640Sales Revenue (80 units $8.00 each)640

Jan 11Purchases (150 units $6.50 each)900975Accounts Payable900975

Jan 13Accounts Receivable10501,050Sales Revenue (120 units $8.75 each)10501,050

Jan 20Purchases (160 units $7.00 each)11201,120Accounts Payable11201,120

Jan 27Accounts Receivable900900Sales Revenue (100 units $9.00 each)900900

Jan 31Inventory (110 units $7.00 each)770Cost of Goods Sold - [(100 units $6.00 each) + (150 units $6.50 each) + (50 units $7.00 each)]1,925

Purchases [(150 units $6.50 each) + (160 units $7.00 each)]2,095Beginning Inventory (100 units $6.00 each)600

(b) Compute the gross profit using the periodic system.

Sales Revenue [(80 units $8.00 each) + (120 units $8.75 each) + (100 units $9.00 each)]$2,590

Cost of goods sold1,925Gross profit$665

(c) Assume Chippewas uses a perpetual system. Prepare all necessary journal entries.Jan 4Accounts Receivable640Sales Revenue (80 units $8.00 each)640Cost of goods sold480Inventory (80 units $6.00 each)480

Jan 11Inventory (150 units $6.50 each)975Accounts payable975

Jan 13Accounts Receivable1,050Sales Revenue (120 units $8.75 each)1,050Cost of goods sold770Inventory [(20unitsX$6.00each)+(100unitsX$6.50each)]770

Jan 20Inventory (160 units $7.00 each)1,120Accounts payable1,120

Jan 27Accounts Receivable900Sales Revenue (100 units $9.00 each)900Cost of goods sold675Inventory [(50units$6.50each)+(50units$7.00each)]675

(d) Compute the gross profit using the perpetual system.

Sales Revenue [(80 units $8.00 each) + (120 units $8.75 each) + (100 units $9.00each)]$2,590

Cost of goods sold1,925Gross profit$665


Exercise 8-9


E8-9 (Periodic versus Perpetual Entries) Chippewas Company sells one product. Presented below is information for January for Chippewas Company.

Jan 1Inventory100units at$6.00eachJan 4Sale80units at$8.00eachJan 11Purchase150units at$6.50eachJan 13Sale120units at$8.75eachJan 20Purchase160units at$7.00eachJan 27Sale100units at$9.00each

Chippewas uses the FIFO cost flow assumption. All purchases and sales are on account.

Instructions:(a) Assume Chippewas uses a periodic system. Prepare all necessary journal entries, including the end-of-month closing entry to record cost of goods sold. A physical count indicates that the

ending inventory for January is110units.

Jan 4Account TitleAmountAccount TitleAmount

Jan 11Account Title900AmountAccount Title900Amount




Jan 31Text TitleAmountText TitleAmountText TitleAmountText TitleAmount

(b) Compute the gross profit using the periodic system.

Text TitleAmount

Text TitleAmountText TitleFormula

(c) Assume Chippewas uses a perpetual system. Prepare all necessary journal entries.Jan 4Account TitleAmountAccount TitleAmountAccount Title900AmountAccount Title900Amount


Jan 13Account TitleAmountAccount TitleAmountAccount Title900AmountAccount Title900Amount


Jan 27Account TitleAmountAccount TitleAmountAccount Title900AmountAccount Title900Amount

(d) Compute the gross profit using the perpetual system.

Text TitleAmount

Text TitleAmountText TitleFormula


Problem 8-3 Solution


P8-3 (Purchases Recorded Gross and Net) Some of the transactions of Torres Company during August are listed below. Torres uses the periodic inventory method.

Aug 10Purchased merchandise on account, terms 2/10, n/30$12,000Aug 13Returned part of the purchase of Aug 10, and received credit on acct$1,200Aug 15Purchased merchandise on account, terms 1/10, n/60$16,000Aug 25Purchased merchandise on account, terms 2/10, n/30$20,000Aug 28Paid invoice of August 15 in full.

Instructions:(a) Assuming that purchases are recorded at gross amounts and that discounts are to be recorded when taken:

(1) Prepare general journal entries to record the transactions.Aug 10Purchases12,000Accounts Payable12,000

Aug 13Accounts Payable1,200Purchases Returns and Allowances1,200

Aug 15Purchases16,000Accounts Payable16,000

Aug 25Purchases20,000Accounts Payable20,000

Aug 28Accounts Payable16,000Cash16,000

(2) Describe how the various items would be shown in the financial statements.Purchasesaddition in cost of goods sold section of income statement.

Purchase Returns and Allowancesdeduction from purchases in cost of goods sold section of the income statement.

Accounts Payablecurrent liability in the current liabilities section of the balance sheet.

(b) Assuming that purchases are recorded at net amounts and that discounts lost are treated as finance expenses:

(1) Prepare general journal entries to record the transactions.

Aug 10Purchases11,760Accounts Payable [$12,000 (100% - 2%)]11,760

Aug 13Accounts Payable [$1,200 (100% - 2%)]1,176Purchases Returns and Allowances1,176



Aug 28Accounts Payable15,840Purchases Discount Lost ($16,000 1%)160Cash16,000

(2) Prepare the adjusting entry necessary on August 31 if financial statements are to be prepared at that time.

Aug 31Purchases Discount Lost [($12,000 - $1,200) 2%]216Accounts Payable216

(3) Describe how the various items would be shown in the financial statements.Same as part (a) (2) except treat Purchases Discounts Lost as financial expense the income statement.

(c) Which of the two methods do you prefer and why?

The second method is better theoretically because it results in the inventory being carried net of purchase discounts, and purchase discounts not taken are shown as an expense. The first method is normally used, however, for practical reasons.


Problem 8-3


P8-3 (Purchases Recorded Gross and Net) Some of the transactions of Torres Company during August are listed below. Torres uses the periodic inventory method.

Aug 10Purchased merchandise on account, terms 2/10, n/30$12,000Aug 13Returned part of the purchase of Aug 10, and received credit on acct$1,200Aug 15Purchased merchandise on account, terms 1/10, n/60$16,000Aug 25Purchased merchandise on account, terms 2/10, n/30$20,000Aug 28Paid invoice of August 15 in full.

Instructions:(a) Assuming that purchases are recorded at gross amounts and that discounts are to be recorded when taken:

(1) Prepare general journal entries to record the transactions.Aug 10Account TitleAmountAccount TitleAmount

Aug 13Account TitleAmountAccount TitleAmount




(2) Describe how the various items would be shown in the financial statements.Enter text answer here.

Enter text answer here.


(b) Assuming that purchases are recorded at net amounts and that discounts lost are treated as finance expenses:

(1) Prepare general journal entries to record the transactions.





Aug 28Account TitleAmountAccount TitleAmountAccount TitleAmount

(2) Prepare the adjusting entry necessary on August 31 if financial statements are to be prepared at that time.


(3) Describe how the various items would be shown in the financial statements.Enter text answer here.

(c) Which of the two methods do you prefer and why?



Problem 8-4 Solution


P8-4 (Compute FIFO, LIFO, and Average Cost) Hull Companys record of transactions concerning part X for the month of April was as follows.

PurchasesSalesQuantity:Unit Cost:Quantity:Apr 1(Balance on hand)100$5.00Apr 5300Apr 44005.10Apr 12200Apr 113005.30Apr 27800Apr 182005.35Apr 28150Apr 266005.60Apr 302005.80

Instructions:(a) Compute the inventory at April 30 on each of the following bases. Assume that perpetual inventory records are kept in units only. Carry unit costs to the nearest cent.

PurchasesSalesDates and UnitsUnit CostDates and UnitsApril 1 (balance on hand)100$5.00Apr 5300Apr 4400$5.10Apr 12200Apr 11300$5.30Apr 27800Apr 18200$5.35Apr 28150Apr 26600$5.60Total units1,450Apr 30200$5.80Total units1,800Total units sold1,450Total units (ending inventory)350

(1) First-in, First-out, (FIFO). (Assuming costs are not computed for each withdrawal - Perpetual.)

Date of InvoiceNo. UnitsUnit CostTotal CostApr 30200$5.80$1,160.00Apr 26150$5.60$840.00Value of ending inventory, FIFO, Periodic valuation: $2,000.00

(2) Last-in, First-out, (LIFO). (Assuming costs are not computed for each withdrawal - Perpetual.)

Date of InvoiceNo. UnitsUnit CostTotal CostApr 1100$5.00$500.00Apr 4250$5.10$1,275.00Value of ending inventory, LIFO, Periodic valuation: $1,775.00

(3) Average cost.

Date of InvoiceNo. UnitsUnit CostTotal CostApr 1100$5.00$500.00Apr 4400$5.10$2,040.00Apr 11300$5.30$1,590.00Apr 18200$5.35$1,070.00Apr 26600$5.60$3,360.00Apr 30200$5.80$1,160.00Total Available1,800$9,720.00

Average cost per unit:$5.40Units in ending inventory:350Ending valuation of inventory, average cost method$1,890.00

(b) If the perpetual inventory record is kept in dollars, and costs are computed at the time of each withdrawal, what amount would be shown as ending inventory in 1, 2, and 3 above? Carry average unit costs to four decimal places.

(1) First-in, First-out, (FIFO). (Assuming costs are computed for each withdrawal - Perpetual.)

The valuation of inventory under FIFO perpetual would be the same in FIFO Periodic, as shown in part (a), $2,000.00.

(2) Last-in, First-out, (LIFO). (Assuming costs are computed for each withdrawal - Perpetual.)The area within gray highlighting should contain sales details.

DatePurchasedNo. of unitsUnit costSoldNo. of unitsEventDetailUnit costBalance*No. of unitsUnitcostAmountApr 1100$5.00100$5.00$500.00

Apr 4100$5.00100$5.00$500.00400$5.10400$5.10$2,040.00Balance$2,540.00

Apr 5100$5.00100$5.00$500.00400$5.10300300$5.10100$5.10$510.000$0.00$0.00Balance$1,010.00

Apr 11100$5.00100$5.00$500.00100$5.10100$5.10$510.00300$5.30300$5.30$1,590.00Balance$2,600.00

Apr 12100$5.00100$5.00$500.00100$5.10100$5.10$510.00300$5.30200200$5.30100$5.30$530.00$0.00Balance$1,540.00

Apr 18100$5.00100$5.00$500.00100$5.10100$5.10$510.00100$5.30100$5.30$530.00200$5.35200$5.35$1,070.00Balance$2,610.00

Apr 26100$5.00100$5.00$500.00100$5.10100$5.10$510.00100$5.30100$5.30$530.00200$5.35200$5.35$1,070.00600$5.60600$5.60$3,360.00Balance$5,970.00

Apr 27100$5.00100$5.00$500.00100$5.10100$5.10$510.00100$5.30100$5.30$530.00200$5.35800200$5.350$5.35$0.00600$5.60600$5.600$5.60$0.00Balance$1,540.00

Apr 28100$5.00100$5.00$500.00100$5.1015050$5.1050$5.10$255.00100$5.30100$5.300$5.30$0.00Balance$755.00

Apr 30100$5.00100$5.00$500.0050$5.1050$5.10$255.00200$5.80200$5.80$1,160.00Balance$1,915.00

The valuation of inventory under LIFO - Perpetual is $1,915.00 with detail as shown.

(3) Average Cost. (Perpetual.)

The area within gray highlighting should contain sales details.

DatePurchasedNo. of unitsUnit costSoldNo. of unitsUnit costBalanceNo. of unitsUnit cost*Ext'd InvValuationApr 1100$5.0000100$5.0000$500.00Apr 4400$5.1000Balance500$5.0800$2,540.00Apr 5300$5.0800Balance200$5.0800$1,016.00Apr 11300$5.3000Balance500$5.2120$2,606.00Apr 12200$5.2120Balance300$5.2120$1,563.60Apr 18200$5.3500Balance500$5.2672$2,633.60Apr 26600$5.6000Balance1,100$5.4487$5,993.60Apr 27800$5.4487Balance300$5.4487$1,634.62Apr 28150$5.4487Balance150$5.4487$817.31Apr 30200$5.8000Balance350$5.6495$1,977.31Slight differences in values are due to significant digit rounding.The valuation of inventory under Average Cost - Perpetual is $1,977.31 with detail as shown.


Problem 8-4


P8-4 (Compute FIFO, LIFO, and Average Cost) Hull Companys record of transactions concerning part X for the month of April was as follows.

PurchasesSalesQuantity:Unit Cost:Quantity:Apr 1(Balance on hand)100$5.00Apr 5300Apr 44005.10Apr 12200Apr 113005.30Apr 27800Apr 182005.35Apr 28150Apr 266005.60Apr 302005.80

Instructions:(a) Compute the inventory at April 30 on each of the following bases. Assume that perpetual inventory records are kept in units only. Carry unit costs to the nearest cent.

PurchasesSalesDates and UnitsUnit CostDates and UnitsApril 1 (balance on hand)QuantityAmountApr 5QuantityApr 4QuantityAmountApr 12QuantityApr 11QuantityAmountApr 27QuantityApr 18QuantityAmountApr 28QuantityApr 26QuantityAmountTotal unitsFormulaApr 30QuantityAmountTotal unitsFormulaTotal units soldQuantityTotal units (ending inventory)Formula

(1) First-in, First-out, (FIFO). (Assuming costs are not computed for each withdrawal - Perpetual.)

Date of InvoiceNo. UnitsUnit CostTotal CostApr 30QuantityAmountFormulaApr 26QuantityAmountFormulaValue of ending inventory, FIFO, Periodic valuation: Formula

(2) Last-in, First-out, (LIFO). (Assuming costs are not computed for each withdrawal - Perpetual.)

Date of InvoiceNo. UnitsUnit CostTotal CostApr 1QuantityAmountFormulaApr 4QuantityAmountFormulaValue of ending inventory, LIFO, Periodic valuation: Formula

(3) Average cost.

Date of InvoiceNo. UnitsUnit CostTotal CostApr 1QuantityAmountFormulaApr 4QuantityAmountFormulaApr 11QuantityAmountFormulaApr 18QuantityAmountFormulaApr 26QuantityAmountFormulaApr 30QuantityAmountFormulaTotal AvailableFormulaFormula

Average cost per unit:AmountUnits in ending inventory:QuantityEnding valuation of inventory, average cost methodFormula

(b) If the perpetual inventory record is kept in dollars, and costs are computed at the time of each withdrawal, what amount would be shown as ending inventory in 1, 2, and 3 above? Carry average unit costs to four decimal places.

(1) First-in, First-out, (FIFO). (Assuming costs are computed for each withdrawal - Perpetual.)

Enter text answer here as required.

(2) Last-in, First-out, (LIFO). (Assuming costs are computed for each withdrawal - Perpetual.)The area within gray highlighting should contain sales details.

DatePurchasedNo. of unitsUnit costSoldNo. of unitsEventDetailUnit costBalance*No. of unitsUnit costAmountApr 1100$5.00100$5.00$500.00

Apr 4

Balance

Apr 5

Balance

Apr 11

Balance

Apr 12

Balance

Apr 18

Balance

Apr 26

Balance

Apr 27

Balance

Apr 28

Balance

Apr 30

Balance

Enter text answer here as appropriate

(3) Average Cost. (Perpetual.)

The area within gray highlighting should contain sales details.

DatePurchasedNo. of unitsUnit costSoldNo. of unitsUnit costBalanceNo. of unitsUnit cost*Ext'd InvValuationApr 1100$5.0000100$5.0000$500.00Apr 4BalanceApr 5BalanceApr 11BalanceApr 12BalanceApr 18BalanceApr 26BalanceApr 27BalanceApr 28BalanceApr 30BalanceSlight differences in values are due to significant digit rounding.Enter text answer here as appropriate.


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