|
Date
|
Transaction
|
Number of Units
|
Per Unit
|
Total
|
|
| Jan. | 1 | Inventory | 7,500 | $75.00 | $562,500 |
| 10 | Purchase | 22,500 | 85.00 | 1,912,500 | |
| 28 | Sale | 11,250 | 150.00 | 1,687,500 | |
| 30 | Sale | 3,750 | 150.00 | 562,500 | |
| Feb. | 5 | Sale | 1,500 | 150.00 | 225,000 |
| 10 | Purchase | 54,000 | 87.50 | 4,725,000 | |
| 16 | Sale | 27,000 | 160.00 | 4,320,000 | |
| 28 | Sale | 25,500 | 160.00 | 4,080,000 | |
| Mar. | 5 | Purchase | 45,000 | 89.50 | 4,027,500 |
| 14 | Sale | 30,000 | 160.00 | 4,800,000 | |
| 25 | Purchase | 7,500 | 90.00 | 675,000 | |
| 30 | Sale | 26,250 | 160.00 | 4,200,000 |
| Instructions | |
| 1. | Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3, using the first-in, first-out method. |
| 2. | Determine the total sales and the total cost of merchandise sold for the period. Journalize the entries in the sales and cost of merchandise sold accounts. Assume that all sales were on account and date your journal entry March 31. Refer to the Chart of Accounts for exact wording of account titles. |
| 3. | Determine the gross profit from sales for the period. |
| 4. | Determine the ending inventory cost as of March 31. |
| 5. | Based upon the preceding data, would you expect the inventory using the last-in, first-out method to be higher or lower? |
The beginning inventory at Midnight Supplies and data on purchases and sales for a three-month period ending March 31 are as follows:
| Date | Transaction | Number of Units |
Per Unit | Total | ||||
|---|---|---|---|---|---|---|---|---|
| Jan. 1 | Inventory | 7,500 | $75.00 | $562,500 | ||||
| 10 | Purchase | 22,500 | 85.00 | 1,912,500 | ||||
| 28 | Sale | 11,250 | 150.00 | 1,687,500 | ||||
| 30 | Sale | 3,750 | 150.00 | 562,500 | ||||
| Feb. 5 | Sale | 1,500 | 150.00 | 225,000 | ||||
| 10 | Purchase | 54,000 | 87.50 | 4,725,000 | ||||
| 16 | Sale | 27,000 | 160.00 | 4,320,000 | ||||
| 28 | Sale | 25,500 | 160.00 | 4,080,000 | ||||
| Mar. 5 | Purchase | 45,000 | 89.50 | 4,027,500 | ||||
| 14 | Sale | 30,000 | 160.00 | 4,800,000 | ||||
| 25 | Purchase | 7,500 | 90.00 | 675,000 | ||||
| 30 | Sale | 26,250 | 160.00 | 4,200,000 |
Required:
1. Record the inventory, purchases, and cost of goods sold data in a perpetual inventory record similar to the one illustrated in Exhibit 4, using the last-in, first-out method. Under LIFO, if units are in inventory at two different costs, enter the units with the HIGHER unit cost first in the Cost of Goods Sold Unit Cost column and LOWER unit cost first in the Inventory Unit Cost column. Round unit cost to two decimal places, if necessary.
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