BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

Solutions

Chapter
Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

FIFO perpetual inventory

The beginning inventory of merchandise at Dunne Co. and data on purchases and sales for a three-month period ending June 30 are as follows:

images

Instructions

  1. 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. 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.
  3. 3. Determine the gross profit from sales for the period.
  4. 4. Determine the ending inventory cost on June 30.
  5. 5. Based upon the preceding data, would you expect the inventory using the last-in, first-out method to be higher or lower?

(1)

To determine

Perpetual Inventory System:

Perpetual Inventory System refers to the inventory system that maintains the detailed records of every inventory transactions related to purchases, and sales on a continuous basis. It shows the exact on-hand-inventory at any point of time.

First-in-First-Out:

In First-in-First-Out method, the costs of the initially purchased items are considered as cost of goods sold, for the items which are sold first. The value of the ending inventory consists of the recent purchased items.

To record: the inventory, purchases and cost of merchandise sold in perpetual inventory system.

Explanation

Calculate the cost of merchandise sold and ending inventory.

(2)

To determine

To record: the journal entries for sales and cost of merchandise sold accounts.

(3)

To determine
Gross profit from sales for the period.

(4)

To determine
ending inventory cost for the period.

(5)

To determine

To state: the inventory value to be higher or lower using LIFO method for the given above data.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

How can you prevent multimedia presentation software from stealing your thunder?

Essentials of Business Communication (MindTap Course List)

Identify the major considerations when organizing a business.

Foundations of Business (MindTap Course List)

Why do economists make assumptions?

Principles of Microeconomics (MindTap Course List)

Where is cash received for interest reported on the statement of cash flows?

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

MVA Over the years, McLaughlin Corporation's stockholders have provided 35,000,000 of capital, when they purcha...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)