The beginning inventory at Funky Party Supplies and data on purchases and sales

Question

The beginning inventory at Funky Party Supplies and data on purchases and sales for a three-month period ending March 31, 2016, are as follows: Date Transaction Number of Units Per Unit Total Jan. 1 Inventory 2,500 $52.00 $130,000 10 Purchase 7,800 60.00 468,000 28 Sale 3,750 104.00 390,000 30 Sale 1,200 104.00 124,800 Feb. 5 Sale 500 104.00 52,000 10 Purchase 17,500 62.00 1,085,000 16 Sale 8,600 109.00 937,400 28 Sale 8,900 109.00 970,100 Mar. 5 Purchase 14,200 63.60 903,120 14 Sale 10,200 109.00 1,111,800 25 Purchase 2,400 64.00 153,600 30 Sale 8,900 109.00 970,100 Instructions 1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 4 , 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 exact wording of account titles. 3. Determine the gross profit from sales for the period. 4. Determine the ending inventory cost as of March 31, 2016. 5. Based upon the preceding data, would you expect the inventory using the last-in, first-out method The method of inventory costing based on the assumption that the cost of merchandise sold is the cost of the most recent purchases. to be higher or lower?

I need help with FIFO and Journal for this question tonight.

Explanation / Answer

Using first in first out inventory is as follows:

Purchase Sale Closing stock Month Particulars Units Unit cost Total cost Units Unit cost Total cost Units Unit cost Total cost 1st Jan Opening inventory 2500 52 130000 2500 52 130000 10th jan Purchases 7800 60 468000 7800 60 468000 28th jan 3750 104 390000 6550 60 393000 30th jan 1200 104 124800 5350 60 321000 5th Feb 500 104 52000 4850 60 291000 10th Feb Purchase 17500 62 1085000 16th Feb 8600 109 937400 13750 62 852500 28th Feb 8900 109 4850 62 300700 5th Mar Purchase 14200 63.6 903120 14th Mar 10200 109 1111800 8850 63.6 562860 25th Mar Purchase 2400 64 153600 2400 64 153600 30th Mar 8900 109 970100 50 63.6 3180 2400 64 153600

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