The beginning inventory at Midnight Supplies and data on purchases and sales for

Question

The beginning inventory at Midnight Supplies and data on purchases and sales for a three-month period ending March 31, are as follows:

Date

Date

Transaction Number of Units Per Unit Total Jan. 1 Inventory 2,600 $58.00 $150,800 10 Purchase 7,200 66.00 475,200 28 Sale 3,950 116.00 458,200 30 Sale 1,300 116.00 150,800 Feb. 5 Sale 500 116.00 58,000 10 Purchase 17,500 68.00 1,190,000 16 Sale 9,200 121.00 1,113,200 28 Sale 8,000 121.00 968,000 Mar. 5 Purchase 14,400 69.60 1,002,240 14 Sale 10,100 121.00 1,222,100 25 Purchase 3,300 70.00 231,000 30 Sale 7,900 121.00 955,900

Explanation / Answer

1) Midnight Supplies Schedule of Cost Of Merchandise Sold under FIFO Method For the three months ended 31st March (Amount In $) Purchases Cost of Merchandise Sold Inventory Date Quantity Purchases Total Cost Quantity unit Cost Total Cost Quantity Unit Cost Total unit Cost Jan.01 2600 58 150800 Jan.10 7200 66 475200 9800 626000 Jan.28 2600 58 150800 1350 66 89100 5850 66 386100 Jan.30 1300 66 85800 4550 66 300300 Feb.01 4550 66 300300 Feb.05 500 66 33000 4050 66 267300 Feb.10 17500 68 1190000 21550 1457300 Feb.16 4050 66 267300 5150 68 350200 12350 68 839800 Feb.28 8000 68 544000 4350 68 295800 Mar.01 4350 68 295800 Mar.05 14400 69.6 1002240 18750 1298040 Mar.14 4350 68 295800 5750 69.6 400200 8650 69.6 602040 Mar.25 3300 70 231000 11950 833040 Mar.30 7900 69.6 549840 750 69.6 52200 3300 70 231000 FIFO Method: Inventory Purchased First would be Sold First Closing Stock would remain mainly from latest Purchases made 3 Calculation of Gross Profit: January Febuary March Total Sales $ 609000 2139200 2178000 4926200 Less: Cost of Goods Sold $ 325700 1194500 1245840 2766040 Gross Profit $ 283300 944700 932160 2160160 4 Closing Stock on 31st March is $283200 January Sales jan.28 3950 116 458200 jan.30 1300 116 150800 609000 Febuary Sales Feb.5 500 116 58000 Feb.16 9200 121 1113200 Feb.28 8000 121 968000 2139200 March Sales Mar.14 10100 121 1222100 Mar.30 7900 121 955900 2178000 Last in inventory Value would be Lower than FIFO Method as Closing Inventory under LIFO would be Valued at $69.6 i.e 4050*69.6 281880 2) Journal Entry Mar.31 Accounts Receivable a/c Dr $4926200 To Sales $4926200 Mar.31 Cost Of Merchandise Sold a/c Dr $2766040 To Inventory $2766040

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