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Topic 8

Solutions to Homework

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Quick check – Chapter 6

|1.a |2.c |3.a |5.d |6.c |8.c |

Explanations:

1. a. Net profit = $600 (Sales $9,300 − Cost of sales $6,000 − Total operating expenses $2,700)

3. a. Cost of sales is $490 [$190 from the 10 units of beginning inventory + $300 (15 units @ $20 from the first purchase)]

5.d. FIFO carries over from question 3.

Sales revenue is $1,000 (25 units @ $40). Cost of goods sold is $490, as computed in question 3.

S5-10 (5-10 min.)

|Canberra Communications |

|Income Statement |

|Year Ended 31 January, 20X1 |

| | Millions $ |

|Net sales revenue |25,000 |

|Cost of goods sold | 20,000 |

|Gross profit |5,000 |

|Operating expenses | 3,500 |

|Net profit | $ 1,500 |

E6A-3 (20-30 min.)

a. $64,000 ($101,000 − $37,000)

b. $137,000 ($94,000 + $43,000)

c. $24,000 ($25,000 + $93,000 − $94,000)

d. $30,000 (Let d = beginning inventory;

d + $54,000 − $22,000 =...