P6-6B Revised Solution
Note: This problem has a couple of remaining issues…First, on November 3, Yoshi only paid freight for 70 of the 80 units that were delivered on November 2. A possible explanation is that Yoshi called the supplier on November 2 and said that ten of the units received were damaged and the supplier agreed to pay the freight for the ten units and pick them up on the 9th. Second, we don't know if Yoshi took the discount on the units purchased on the 21st, but evidently not.
November 2 | | Debit | Credit |
Inventory | 8,000 | |
Accounts Payable | | 8,000 |
(Purchase inventory on account) | |
November 3 | | | |
Inventory | 210 | |
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Problem 6-6B (concluded)
November 30 | | Debit | Credit |
Cost of Goods Sold | 150 | |
Inventory | | 150* |
(Adjust inventory down to market) | |
* The market value of ending inventory ($800 = $80 market value x 10 units) is $150 less than ending inventory after the LIFO adjustment ($950 from Requirement 2).
Yoshi Inc.Multiple-step Income Statement (partial)For the month of November |
Net sales | | | $21,100 | |
Cost of goods sold* | | | 17,320 | |
Gross Profit | | $3,780 | |
| | | |
* Cost of goods sold equals the cost of the units sold ($17,070) + LIFO adjustment ($100) + write down to market value ($150).