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Week 3 E6-6 P6-3A E8-8 P8-3A

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E6-6 Yount Company reports the following for the month of June.

Units  Unit Cost  Total Cost 
1-Jun Inventory  200 $5 $1,000
12 Purchase  300 6 1,800
23 Purchase  500 7 3,500
30 Inventory  120


Instructions

(a) Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO and
(2) LIFO.

(b) Which costing method gives the higher ending inventory? Why?

(c) Which method results in the higher cost of goods sold? Why?


P6-3A Eddings Company had a beginning inventory of 400 units of Product XNA at a cost of
$8.00 per unit. During the year, purchases were

Feb. 20  600 units at $9  Aug. 12  300 units at $11 
5-May 500 units at $10  Dec. 8  200 units at $12 


Eddings Company uses a periodic inventory system. Sales totaled 1,500 units.

Instructions

(a) Determine the cost of goods available for sale.

(b) Determine (1) the ending inventory, and (2) the cost of goods sold under each of the assumed
cost flow methods (FIFO, LIFO, and average). Prove the accuracy of the cost of goods sold
under the FIFO and LIFO methods

(c) Which cost flow method results in (1) the lowest inventory amount for the balance sheet, and
(2) the lowest cost of goods sold for the income statement?

E8-8 Lincolnville Company uses an imprest petty cash system. The fund was established on
March 1 with a balance of $100. During March the following petty cash receipts were found in the
petty cash box.

Receipt 
Date  No.  For  Amount 
5-Mar 1 Stamp Inventory  $39
7 2 Freight-out  21
9 3 Miscellaneous Expense  6
11 4 Travel Expense  24
14 5 Miscellaneous Expense  5


The fund was replenished on March 15 when the fund contained $3 in cash. On March 20, the
amount in the fund was increased to $150.

Instructions

Journalize the entries in March that pertain to the operation of the petty cash fund.

P8-3A On May 31, 2010, James Logan Company had a cash balance per books of $6,781.50.
The bank statement from Farmers State Bank on that date showed a balance of $6,404.60. A
comparison of the statement with the cash account revealed the following facts.

1. The statement included a debit memo of $40 for the printing of additional company checks.

2. Cash sales of $836.15 on May 12 were deposited in the bank.The cash receipts journal entry
and the deposit slip were incorrectly made for $886.15. The bank credited Logan Company
for the correct amount.

3. Outstanding checks at May 31 totaled $576.25. Deposits in transit were $1,916.15.

4. On May 18, the company issued check No. 1181 for $685 to Barry Trest, on account.The check,
which cleared the bank in May, was incorrectly journalized and posted by Logan Company for
$658.

5. A $2,500 note receivable was collected by the bank for Logan Company on May 31 plus $80
interest.The bank charged a collection fee of $20. No interest has been accrued on the note.

6. Included with the cancelled checks was a check issued by Bridgetown Company to Tom Lujak
for $800 that was incorrectly charged to Logan Company by the bank.
7. On May 31, the bank statement showed an NSF charge of $680 for a check issued by Sandy
Grifton, a customer, to Logan Company on account.

Instructions

(a) Prepare the bank reconciliation at May 31, 2010.

(b) Prepare the necessary adjusting entries for Logan Company at May 31, 2010.












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