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Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition by Donald E. Kieso, Paul D. Kimmel, Jerry J. Weygandt

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SOLUTION TO EXERCISE 5-4

Approach: Use the computation models in Illustration 5-1 and the data that flows through the Inventory account. Fill in the information given. Solve for the unknown.

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TIP: Sales allowances have no impact on the balance of the Inventory account or the cost of goods sold computation.

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TIP: Net sales is irrelevant information for the question at hand.

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TIP: The beginning and ending inventory amounts have no effect on the computation of the cost of goods purchased. Freight-out is a selling expense and, therefore, does not affect the computation of the cost of goods purchased.

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