Complete the inventory value of the units sold as of the end of the year under e

Question

Complete the inventory value of the units sold as of the end of the year under each of the following methods a) Average cost, b) FIFO, C Li Problem 5 (30%) Henry Company engaged in the following transactions in October Oct. 7 Sold merchandise on credit to Larry Hill, terms 2/10,n/30, FOB shipping point, $3,000 (cost, $1,800). Purchased merchandise on credit from Eagle Company, terms n/30, FOB Shipping point, $6,400. Paid Kendall Company for shipping charges on merchandise purchased on October 8, $254 Larry Hill returned some of merchandise sold to him on October 7, for Credit, $200(cost, $120), and we returned the merchandise to inventory. Received payment from Larry Hill for purchase of October 7, less credit of October 10. 8 9 10 12 INSTRUCTIONS 1. Prepare general journal entries to record the transactions, assuming the periodic inventory system is used. Prepare general journal entries to record the transactions, assuming the perpetual inventory system is used. 2.

Explanation / Answer

Answer 1. Periodic Inventory Journal Entry Date Particulars Dr. Amt. Cr. Amt. 7-Oct Accounts Receivable                Dr.          3,000    To Sales          3,000 (Record the Goods Sold on credit) 8-Oct Purchase                                        Dr.          6,400 To Accounts Payable          6,400 (Records the goods purchased) 9-Oct Freight Inwards                          Dr.             254    To Cash             254 (Record the freight paid) 10-Oct Sales Return                               Dr.             200    To Accounts Receivable             200 (Record the sales return from Larry) 12-Oct Cash                                               Dr.          2,800 Purchase Discount                   Dr.                56    To Accounts Receivable          2,744 (Record the amount recived) Answer 2. Perpetual Inventory Journal Entry Date Particulars Dr. Amt. Cr. Amt. 7-Oct Accounts Receivable                Dr.          3,000    To Sales          3,000 (Record the Goods Sold on credit) 7-Oct Cost of Goods Sold                    Dr.          1,800    To Inventory          1,800 (Record the cost of Goods Sold) 8-Oct Inventory                                      Dr.          6,400 To Accounts Payable          6,400 (Records the goods purchased) 9-Oct Inventory                                      Dr.             254    To Cash             254 (Record the freight paid) 10-Oct Sales Return                               Dr.             200    To Accounts Receivable             200 (Record the sales return from Larry) 10-Oct Inventory                                    Dr.             120    To Cost of Goods Sold             120 (Record the sales return ) 12-Oct Cash                                               Dr.          2,800 Purchase Discount                   Dr.                56    To Accounts Receivable          2,744 (Record the amount recived)

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