Q. A company that uses a perpetual inventory system made the following cash purc
ID: 2446896 • Letter: Q
Question
Q. A company that uses a perpetual inventory system made the following cash purchases and sales. There was no beginning inventory.
January 1:
Purchased 100 units at $10 per unit
February 5:
Purchased 60 units at $12 per unit
March 16:
Sold 40 Units for $16 per unit
Prepare general journal entries to record the March 16 sale using the FIFO inventory valuation method.
January 1:
Purchased 100 units at $10 per unit
February 5:
Purchased 60 units at $12 per unit
March 16:
Sold 40 Units for $16 per unit
Explanation / Answer
Journal Entries
On January 1 Purchase A/c DR $ 1,000
To Vendors A/c $ 1,000
Cost of Goods Sold A/c DR $ 1,000
To Purchase A/c $ 1,000
On February 5 Purchases A/c DR $ 720
To Vendors A/c $ 720
Cost of Goods Sold A/c DR $ 720
To Purchases A/c $ 720
March 16 Receivables A/c DR $ 640
To Sales A/c $ 640
Sales A/c DR $ 400
To Cost of Goods Sold A/c $ 400
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