Answered: . Record the inventory, purchases, and…

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter7: Inventories

Section: Chapter Questions

Problem 4PB: The beginning inventory for Dunne Co. and data on purchases and sales for a three-month period are...

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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	2,700	$50.00	$135,000
	10	Purchase	7,300	58.00	423,400
	28	Sale	4,050	100.00	405,000
	30	Sale	1,200	100.00	120,000
Feb.	5	Sale	500	100.00	50,000
	10	Purchase	17,000	60.00	1,020,000
	16	Sale	9,200	105.00	966,000
	28	Sale	8,000	105.00	840,000
Mar.	5	Purchase	14,300	61.60	880,880
	14	Sale	10,300	105.00	1,081,500
	25	Purchase	3,200	62.00	198,400
	30	Sale	8,000	105.00	840,000

	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 the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.
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?

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 the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.

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?

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