PR 7-1A FIFO perpetual inventory OBJ. 2, 3 The beginning inventory at Midnight S

Question

PR 7-1A FIFO perpetual inventory OBJ. 2, 3 The beginning inventory at Midnight Supplies and data on purchases and sales for a three-month period ending March 31, are as follows: Number of Units Per Unit Date Transaction Total 7,500 s 75.00 562,500 22,500 85.0 1,912,500 11,250 150.00 1,687,500 562,500 225,000 87.50 4,725,000 27,000 160.00 4,320,000 4,080,000 Jan. 1 Inventory 10 Purchase 28 Sale 30 Sale 3.750 1,500 54,000 150.00 150.00 Feb. 5 Sale 10 Purchase 16 Sale 28 Sale 25,500 45,000 160.00 89.50 4,027,500 30,000 160.00 4,800,000 675,000 26,250 160.00 4,200,000 Mar. 5 Purchase 14 Sale 25 Purchase 7,500 90.00 30 Sale 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. Jour- nalize the entries in the sales and cost of merchandise sold accounts. Assume that all sales were on account. 3. Determine the gross profit from sales for the period.

Explanation / Answer

STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL FIFO METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ 1-Jan 7500 75 562500 10-Jan 22500 85 1912500 7500 15 562500 22500 85 1912500 28-Jan 7500 75 562500 3750 85 318750 18750 85 1593750 30-Jan 3750 85 318750 15000 85 1275000 5-Feb 1500 85 127500 13500 85 1147500 10-Feb 54000 87.5 4725000 13500 85 1147500 54000 87.5 4725000 16-Feb 13500 85 1147500 13500 87.5 1181250 40500 87.5 3543750 28-Feb 25500 87.5 2231250 15000 87.5 1312500 5-Mar 45000 89.5 4027500 15000 87.5 1312500 45000 89.5 4027500 14-Mar 15000 87.5 1312500 15000 89.5 1342500 30000 89.5 2685000 25-Mar 7500 90 675000 30000 89.5 2685000 7500 90 675000 30-Mar 26250 89.5 2349375 3750 89.5 335625 7500 90 675000 TOTAL 129000 11340000 125250 10891875 11250 1010625 Req b: Total sales: (1687500+562500+225000+4320000+4080000+4800000+4200000): 19875000 Total cost of Good ssold: 10891875 Journal entries: Accounts receivable Dr. 19875000      Sales revenu Account 19875000 Cost of Goods sold Account Dr. 10891875     Merchandise Invenntory 10891875 Req c: Gross prfit: Sales revenue 19875000 Less: COGS 10891875 Gross prfit: 8983125 Req d: Ending Inventory: 1010625 Req e: Ending inventory using LIFO would have been lower as the prices are rising.

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