AFM123 Lecture Notes - Weighted Arithmetic Mean, Income Statement, Finished Good

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maroonseal566

3 Mar 2014

School

University of Waterloo

Department

Accounting & Financial Management

Course

AFM123

Professor

Peter Blake

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Document Summary

Therefore: cost of goods sold is 4 500 000. 3. most manufacturers and merchandisers (if not all. Specific identification - big ticket items (cars, jewellery, watches, etc. ) Weighted average - most manufacturers and merchandisers (if not all) First-in, first out (fifo) - whatever is the oldest inventory item, gets sold first - Opening balance 400 units @ each --> weighted average. Cgs = 100 x 12 + 300 x 12. 50 + 100 x 12. 75 = 6,225. Ending inventory 100 units @ . 25 = ,325. Weighted average: re-calculate average every time there"s a purchase. Jan. 2: weighted average = (400 x 12) + (300 x 12. 50) / 700 = 12. 214286. Jan. 5: weighted average = (700 x 12. 214) + (2500 x 12. 75) / 950 = 950. Jan. 6: cgs = 300 x 12. 355 = ,706. 58. Jan. 9: weighted average = (650x 12. 355) + (150 x13) / 800 = 800 12. 476. Jan. 10: cgs = 500 x 12. 476 = ,238.

Related Questions

Capwell Corporation uses a periodic inventory system. Thecompany's ending inventory on December 31, 2018, its fiscal-yearend, based on a physical count, was determined to be $338,000.Capwell's unadjusted trial balance also showed the followingaccount balances: Purchases, $740,000; Accounts payable; $270,000;Accounts receivable, $285,000; Sales revenue, $920,000.

The internal audit department discovered the following items:

Goods valued at $44,000 held on consignment from Dix Companywere included in the physical count but not recorded as apurchase.

Purchases from Xavier Corporation were incorrectly recorded at$64,000 instead of the correct amount of $46,000. The correctamount was included in the ending inventory.

Goods that cost $37,000 were shipped from a vendor on December28, 2018, terms f.o.b. destination. The merchandise arrived onJanuary 3, 2019. The purchase and related accounts payable wererecorded in 2018.

One inventory item was incorrectly included in ending inventoryas 220 units, instead of the correct amount of 1,600 units. Thisitem cost $50 per unit.

The 2017 balance sheet reported inventory of $472,000. Theinternal auditors discovered that a mathematical error caused thisinventory to be understated by $74,000. This amount is consideredto be material. Comparative financial statements will beissued.

Goods shipped to a customer f.o.b. destination on December 25,2018, were received by the customer on January 4, 2019. The salesprice was $52,000 and the merchandise cost $28,000. The sale andcorresponding accounts receivable were recorded in 2018.

Goods shipped from a vendor f.o.b. shipping point on December27, 2018, were received on January 3, 2019. The merchandise cost$30,000. The purchase was not recorded until 2019.

Required:
1. Determine the correct amounts for 2018 endinginventory, purchases, accounts payable, accounts receivable, andsales revenue.
2. Calculate cost of goods sold for 2018.
3. What was the effect of the error in endinginventory on 2017 before-tax income

Determine the correct amounts for 2018 ending inventory,purchases, accounts payable, accounts receivable, sales revenue,and cost of goods sold.


Ending inventory
Purchases
Accounts payable
Accounts receivable
Sales revenue
Cost of goods sold

What was the effect of the error in ending inventory on 2017before-tax income?

2017 before-tax incomewas

please answer it in an hour I'll rate emergencythanks

Zoe Corporation has the following information for the month ofMarch:

Purchases	$92,000
Materials inventory, March 1	6,000
Materials inventory, March 31	8,000
Direct labor	25,000
Factory overhead	37,000
Work in process inventory, March1	22,000
Work in process inventory, March31	23,500
Finished goods inventory, March1	21,000
Finished goods inventory, March31	30,000
Sales	257,000
Selling and administrativeexpenses	79,000

Required:

Prepare (a) a schedule of costof goods manufactured, (b) an income statement for the month endedMarch 31, and (c) the Inventory section of the balance sheet. Referto the Labels and Amount Descriptions provided for the exactwording of the answer choices for text entries. Be sure to completethe statement heading. âLessâ or âPlusâ will automatically appearif it is required. You will not need to enter colons (:) on thefinancial statements. Enter all amounts as positivenumbers.

Labels and Amount Descriptions

Labels
Direct materials
For the Month Ended March 31
Inventories
March 31
Operating expenses
Amount Descriptions
Beginning finished goodsinventory
Beginning materials inventory
Beginning work in processinventory, March 1
Cost of finished goods availablefor sale
Cost of goods manufactured
Cost of goods sold
Cost of materials available foruse
Cost of materials used
Direct labor
Ending finished goodsinventory
Ending materials inventory
Ending work in processinventory
Factory overhead
Finished goods
Gross profit
Materials
Net income
Net loss
Purchases
Sales
Selling and administrativeexpenses
Total inventories
Total manufacturing costs
Total manufacturing costsincurred
Work in process

Statement of Cost of Goods Manufactured

Prepare a schedule of cost of goods manufactured. Refer to theLabels and Amount Descriptions provided for the exact wording ofthe answer choices for text entries. Be sure to complete thestatement heading. âLessâ or âPlusâ will automatically appear if itis required. You will not need to enter colons (:) on the statementof cost of goods manufactured. Enter all amounts as positivenumbers.

Zoe Corporation

Statement of Cost of Goods Manufactured

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Income Statement

Prepare an income statement for the month ended March 31. Referto the Labels and Amount Descriptions provided for the exactwording of the answer choices for text entries. Be sure to completethe statement heading. âLessâ or âPlusâ will automatically appearif it is required. You will not need to enter colons (:) on theincome statement.

Zoe Corporation

Income Statement

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Partial Balance Sheet

Prepare the Inventory section of the balance sheet. Refer to theLabels and Amount Descriptions provided for the exact wording ofthe answer choices for text entries. Be sure to complete thestatement heading. You will not need to enter colons (:) on thebalance sheet.

Zoe Corporation

Partial Balance Sheet

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scarletdolphin760

The costs listed in the following related to the factory were incurred during the period. (Hint: Record these items in one entry with one debit to manufacturing overhead and four separate credits):

Building depreciation	$580,000
Insurance (prepaid during 2016, now expired)	$220,000
Utilities (on account)	$ 80,000
Maintenance (paid cash)	$440,000

-Manufacturing overhead was applied at a rate of $20 per machine hour, and 90,000 machine hours were utilized during the year. (Hint: No need to calculate the predetermined overhead rate since it is already given to you here.)
-Miscellaneous selling costs totaling $430,000 were paid. These costs were recorded in an account called selling expenses.
-Miscellaneous general and administrative costs totaling $265,000 were paid. These costs were recorded in an account called G&A expenses.
-Goods costing $2,030,000 (per the job cost sheets) were completed and transferred out of work-in-process inventory.
-Goods were sold on account for $3,800,000.
-The goods sold in transaction 12 had a cost of $2,570,000 (per the job cost sheets).
-Payments totaling $3,300,000 from credit customers related to transaction 12 were received

Required:

Prepare T-accounts for raw materials inventory, work-in-process inventory, finished goods inventory, manufacturing overhead, and cost of goods sold. Enter the beginning balances for the inventory accounts. (Manufacturing overhead and cost of goods sold are temporary accounts and thus do not have a beginning balance.)

Prepare a journal entry for each transaction from 1 through 14 in a format like the one in Figure 2.7, and where appropriate, post each entry to the T-accounts set up in requirement a. Note that these entries reflect the flow of costs through the inventory and cost of goods sold accounts for the year, so you are only posting the dollar amounts related to the T-accounts set up in requirement a. Label each entry in the T-accounts by transaction number, include a short description (e.g., direct materials and manufacturing overhead applied), and total each T-account.

Based on the balance in the manufacturing overhead account prepared in requirement b, prepare a journal entry to close the manufacturing overhead account to cost of goods sold.

Prepare an income statement for the year ended December 31, 2016. Remember to adjust cost of goods sold for any underapplied or overapplied overhead from requirement c.

Why is cost of goods sold adjusted upward on the income statement?

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AFM123 Lecture Notes - Weighted Arithmetic Mean, Income Statement, Finished Good

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