MBC will sell inventory at $160 per unit. MBC will use LIFOmethod and record COG

Question

MBC will sell inventory at $160 per unit. MBC will use LIFOmethod and record COGS on a periodic basis. The company usesstraight line depreciation. A full month of depreciation isrecorded in the month of acquisition. 1) Owners invest $60,000 at the beginning of Jan and receive5,000 shares of $5 par common stock. 2) 200 units of inventory are purchased for $18,000 onaccount. 3) Cash sales 120 units of inventory occur in Jan. 4) Sales on account of 70 units occur in Jan. What are the journal entries? MBC will sell inventory at $160 per unit. MBC will use LIFOmethod and record COGS on a periodic basis. The company usesstraight line depreciation. A full month of depreciation isrecorded in the month of acquisition. 1) Owners invest $60,000 at the beginning of Jan and receive5,000 shares of $5 par common stock. 2) 200 units of inventory are purchased for $18,000 onaccount. 3) Cash sales 120 units of inventory occur in Jan. 4) Sales on account of 70 units occur in Jan. What are the journal entries?

Explanation / Answer

JOURNAL ENTRIES

Dr.

Cr.

JOURNAL ENTRIES

(Periodic method)

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Cr.

1 Cash $60,000        Common stock(5000 shares X $5) $25,000        Additionalpaid in capital $35,000 2 Purchases(200 units x $90) $18,000           AccountsPayable $18,000 3 Cash $19,200        Sales $19,200 (120 units x $160) 4 Accounts receivable $11,200        Sales $11,200 (70units x $160)

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