On May 10, Hudson Computing sold 89 Millennium laptop computers to Apex Publishe
ID: 2454480 • Letter: O
Question
On May 10, Hudson Computing sold 89 Millennium laptop computers to Apex Publishers. At the date of this sale, Hudson’s perpetual inventory records included the following cost layers for the Millennium laptops: Purchase Date Quantity Unit Cost Total Cost Apr. 9 61 $ 1,300 $ 79,300 May 1 35 $ 2,000 70,000 Total on hand 96 $ 149,300 Prepare journal entries to record the cost of the 89 Millennium laptops sold on May 10, assuming that Hudson Computing uses the: a. Specific identification method (63 of the units sold were purchased on April 9, and the remaining units were purchased on May 1). b. Average-cost method. c. FIFO method. d. LIFO method.
Explanation / Answer
(a.) Under Specific identification method:
(63 x 1,300) + (26 x 2,000) = $133,900 COGS
Dr Cost of Goods Sold 133,900
Cr Merchandise Inventory 133,900
(b.) Under Average-cost method.
149,300 / 96 = $1,555.21 cost per unit
1,555.21 x 89 = $138,413.54 COGS
Dr Cost of Goods Sold 138,413.54
Cr Merchandise Inventory $138,413.54
(c.) Under FIFO method.
(61 x 1,300) + (28 x 2,000) = $135,300 COGS
Dr Cost of Goods Sold 135,300
Cr Merchandise Inventory 135,300
(d.) Under LIFO method.
(35 x 2,000) + (54 x 1,300) = $140,200 COGS
Dr Cost of Goods Sold 140,200
Cr Merchandise Inventory 140,200
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