CGA-FA1-Asgns4答案.docVIP

Lesson 4 Suggested solutions Question 1 (15 marks) a. 1) Incorrect. Refer to (3). 2) Incorrect. Refer to (3). 3) Correct. Since the gross margin ratio is 35%, COGS must be 65% for the year ended December 31, 20X5. Therefore, Net sales of €918,000 ( 65% = €596,700 COGS. An alternative calculation is based on the equation: Beginning merchandise inventory + Net purchases – Ending merchandise inventory = COGS. Therefore, €35,000 + (€615,700 – €21,000 – €17,000 + €26,000 = €603,700) – €42,000* = €596,700 COGS. *Note: €42,000 is the adjusted merchandise inventory balance based on the physical count; €50,500 is the merchandise inventory balance according to the accounting records prior to the physical count (€50,500 is the unadjusted merchandise inventory balance). 4) Incorrect. Refer to (3). b. 1) Correct. Beginning merchandise inventory + Net purchases – Unadjusted ending merchandise inventory = Unadjusted COGS. Therefore, €35,000 + (€615,700 – €21,000 – €17,000 + €26,000 = €603,700) – €50,500* = €588,200 Unadjusted COGS. *Note: €42,000 is the adjusted merchandise inventory balance based on the physical count; €50,500 is the merchandise inventory balance according to the accounting records prior to the physical count (€50,500 is the unadjusted merchandise inventory balance). 2) Incorrect. €596,700 3) Incorrect. €605,200 4) Incorrect. €614,900 c. 1) Incorrect. Refer to (2). 2) Correct. Unadjusted ending merchandise inventory of €50,500 less adjusted ending merchandise inventory of €42,000 = €8,500 shrinkage. 3) Incorrect. Refer to (2). 4) Incorrect. Refer to (2). Note: The following T-accounts may be helpful in clarifying the relationships on which the calculations in (a) through (c) are based. Merchandise inventory Cost of goods sold Beginning inventory 35,000 588,200 Unadjusted cost of goods sold Unadjusted cost of goods sold 588,200 Purchases 615,700 21,000 Purchase returns Shrinkage 8,500 Transportation-in 26,000 17,000 Purchase discount