Accounting final exams, Exams of Financial Accounting

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Accounting Assignment

Chapter 6

Rana Serageldin

DR CR

a) Average Cost Beginning Inventory = 9 + 25 = 34 Beginning inventory + Purchase = Cost of goods sold 1620 + 4750 = 6370 Total cost / Total sets = Average Cost 6370 / 34 = 187 Ending Inventory = 8 Available unit – ending inventory = Sold inventory 34 – 8 = 26 Cost of goods sold = 187 * 26 = 4862 Ending Inventory = 8 * 187 = 1496 b) FIFO Beginning Inventory = 1620 / 9 = 180 Purchase = 4750 / 25 = 190 Cost of goods sold = 26 – 9 = 17 1620 + (17 * 190) = 4850 Cost of goods available – Cost of goods sold = Ending Inventory 6370 – 4850 = 1520 c) LIFO Cost of goods sold = 26 – 25 = 1

Ending inventory = 6370 – 4930 = 1440 Average Cost FIFO LIFO Sales revenue 13,050 13,050 13, Cost of goods sold 6,206 5,831 5, Operating expenses 3,570 3,570 3, Net income 3,274 3,468 3,

2) Balance sheet:

a) FIFO Cost of goods sold = (9+6) * 34 = 15 * 34 = 510 Ending Balance = 65 + (13 * 34) = 167 b) LIFO Cost of goods sold = (65 * 6) + (34 * 9) = 390 + 306 = 696

 FIFO

Beginning Balance: 800,000 units @ 5 Purchases: 200,000 units @ 4 500,000 units @ 3 Total sales = 600, Cost of goods sold = 600,000 * 5 = 3,000, Total sales for 600,000 = 5,200, Gross Profit = Sales – cost

 LIFO

Beginning Balance: 800,000 units @ 5 Purchases: 200,000 units @ 4 500,000 units @ 3 Total sales = 600, Cost of goods sold = (500,000 * 3) + (100,000 * 4) = 1,500,000 + 400, = 1,900, Total sales for 600,000 = 5,200, Gross profit = Sales – cost = 5,200,000 – 1,900, = 3,300,

2. The gross profit is different because the cost of goods sold is different. In FIFO it is thought that the units bought first are sold first while in LIFO includes the cost of the latest units purchased.
3. If it is done in any month other than December, there will be no impact as the cost under FIFO is already 5$ per unit but in December there will be an increase Dec 11 = 200,000 * 1 = 200, Dec 24 = 500,000 * 2 = 1,000, Total = 200,000 + 1,000,000 = 1,200,