Appendix I
Review Exercise Solutions
418
Chapter 8 Review Exercise—Solutions
a) Using FIFO, prepare the inventory record to show the closing inventory balance
Date
Purchases
Sales
Balance
Quantity Unit Cost Value Quantity Unit Cost Value Quantity Unit Cost Value
June 1
100
$12 $1,200
June 3
500
$15 $7,500
100
500
$12
$15
$1,200
$7,500
June 10
100
100
$12
$15
$1,200
$1,500
400
$15 $6,000
June 12
300
$18 $5,400
400
300
$15
$18
$6,000
$5,400
June 20
300
$15 $4,500
100
300
$15
$18
$1,500
$5,400
Ending Inventory
$6,900
b) Multistep income statement showing sales revenue, cost of goods sold, and gross profit—using
information from part a)
Mike’s Tikes Toys
Income Statement (Excerpt)
For the Month Ended June 30, 2016
Sales Revenue*
$24,000
Cost of Goods Sold**
7,200
Gross Profit
16,800
*$24,000 = (200 × $45) + (300 × $50)
**$7,200 = $1,200 + $1,500 + $4,500
c) Using the weighted-average cost method, prepare the inventory record to show the closing
inventory balance
Date
Purchases
Sales
Balance
Quantity Unit Cost Value Quantity Unit Cost Value Quantity Unit Cost Value
June 1
100 $12.00 $1,200
June 3
500
$15 $7,500
600 $14.50 $8,700
June 10
200 $14.50 $2,900
400 $14.50 $5,800
June 12
300
$18 $5,400
700 $16.00 $11,200
June 20
300 $16.00 $4,800
400 $16.00 $6,400
Ending Inventory
$6,400
d) Multistep income statement showing sales revenue, cost of goods sold, and gross profit—using
information from part c)
Mike’s Tikes Toys
Income Statement (Excerpt)
For the Month Ended June 30, 2016
Sales Revenue
$24,000
Cost of Goods Sold*
7,700
Gross Profit
16,300
* $7,700 = $2,900 + $4,800
