inning inventory at Funky Party Supplies and data on purchases and sales for a t
ID: 2461367 • Letter: I
Question
inning inventory at Funky Party Supplies and data on purchases and sales for a three-month period ending March 31, 2016, are as follows:
Instructions
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.
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.
Determine the gross profit from sales for the period.
Answer
Check Figure: $2,286,750
Determine the ending inventory cost as of March 31, 2016.
Based upon the preceding data, would you expect the inventory using the last-in, first-out method to be higher or lower?
PR 6-2A
LIFO perpetual inventory
OBJ. 2, 3
Instructions
Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 5, using the last-in, first-out method.
Determine the total sales, the total cost of merchandise sold, and the gross profit from sales for the period.
Answer
Check Figure: Gross profit, $2,252,250
Determine the ending inventory cost as of March 31, 2016.
Explanation / Answer
Answer
Answer 1
Funky party Stock Register (FIFO method)
Figures in $
Inward
Outward
Balance
Date
Particulars
Units
per unit
total
Units
per unit
total
Units
per unit
total
Jan.1
Inventory
2500
60
150000
2500
60
150000
Jan. 10
Purchase
7500
68
510000
2500
60
150000
7500
68
510000
Jan-28
Sale
2500
60
150000
1250
68
85000
6250
68
425000
Jan-30
Sale
1250
68
85000
5000
68
340000
Feb-05
Sale
500
68
34000
4500
68
306000
Feb-10
Purchase
18000
70
1260000
4500
68
306000
18000
70
1260000
Feb-16
Sale
4500
68
306000
4500
70
315000
13500
70
945000
Feb-28
Sale
8500
70
595000
5000
70
350000
Mar-05
Purchase
15000
71.6
1074000
5000
70
350000
15000
71.6
1074000
Mar-14
Sale
5000
70
350000
5000
71.6
358000
10000
71.6
716000
Mar-25
Purchase
2500
72
180000
10000
71.6
716000
2500
72
180000
Mar-30
Sale
8750
71.6
626500
1250
71.6
89500
2500
72
180000
Inventory & purchase
45500
3174000
Closing stock
3750
269500
Cost of goods sold
41750
2904500
Sales
41750
5191250
Profit
2286750
Journal Entries
1. Accounts Receivable A/c Dr. $ 5191250
To Sales Revenue A/c Cr. $ 5191250
2. Cost of Goods sold A/c Dr. $ 2904500
To Inventory A/c Cr. $ 2904500
Answer 3
Based upon Answer 1 and Answer 2,The inventory using the last-in, first-out method ($ 235000)
to be lower than FIFO method ( $ 269500).
Funky party Stock Register (FIFO method)
Figures in $
Inward
Outward
Balance
Date
Particulars
Units
per unit
total
Units
per unit
total
Units
per unit
total
Jan.1
Inventory
2500
60
150000
2500
60
150000
Jan. 10
Purchase
7500
68
510000
2500
60
150000
7500
68
510000
Jan-28
Sale
2500
60
150000
1250
68
85000
6250
68
425000
Jan-30
Sale
1250
68
85000
5000
68
340000
Feb-05
Sale
500
68
34000
4500
68
306000
Feb-10
Purchase
18000
70
1260000
4500
68
306000
18000
70
1260000
Feb-16
Sale
4500
68
306000
4500
70
315000
13500
70
945000
Feb-28
Sale
8500
70
595000
5000
70
350000
Mar-05
Purchase
15000
71.6
1074000
5000
70
350000
15000
71.6
1074000
Mar-14
Sale
5000
70
350000
5000
71.6
358000
10000
71.6
716000
Mar-25
Purchase
2500
72
180000
10000
71.6
716000
2500
72
180000
Mar-30
Sale
8750
71.6
626500
1250
71.6
89500
2500
72
180000
Inventory & purchase
45500
3174000
Closing stock
3750
269500
Cost of goods sold
41750
2904500
Sales
41750
5191250
Profit
2286750
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