The beginning inventory of merchandise at Dunne Co. and data on purchases and sa

Question

The beginning inventory of merchandise at Dunne Co. and data on purchases and sales for a three-month period ending June 30, 2014, are as follows:

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.

3. Determine the gross profit from sales for the period.

4. Determine the ending inventory cost on June 30, 2014.

5. Based upon the preceding data, would you expect the inventory using the last-in, first-out method to be higher or lower?

Number Per Total DateTransactionof UnitsUnit Apr. 3 Inventory $1,200 30,000 93,000 80,000 50,000 75,600 2,000 100,000 40,000 1,260 100,800 90,000 56,250 44,240 99,000 8 Purchase 11 Sale 30 Sale 1,240 2,000 2,000 1,260 75 30 May 8 Purchase 10 Sale 19 Sale 28 Purchase 2,000 June 5 Sale 40 16 Sale 21 Purchase 28 Sale 2,250 2,250 1,264 2,250

Explanation / Answer

STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL FIFO METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ 3-Apr 25 1200 30000 8-Apr 75 1240 93000 25 1200 30000 75 1240 93000 11-Apr 25 1200 30000 15 1240 18600 60 1240 74400 30-Apr 30 1240 37200 30 1240 37200 8-May 60 1260 75600 30 1240 37200 60 1260 75600 10-May 30 1240 37200 20 1260 25200 40 1260 50400 19-May 20 1260 25200 20 1260 25200 28-May 80 1260 100800 100 1260 126000 5-Jun 40 1260 50400 60 1260 75600 16-Jun 25 1260 31500 35 1260 44100 1-Jun 35 1264 44240 35 1260 44100 35 1264 44240 28-Jun 35 1260 44100 9 1264 11376 26 1264 32864 TOTAL 250 313640 249 310776 26 32864 Journal entries Accounts receivable Account Dr. 525250      Sales revenue 525250 Cost of goods sold Account Dr. 310776      Inventory Account 310776 Total sales: 525250 COGS: 310776 Gross Profit 214474 Ending Inventory: 32864 Lower, the inventory under LIFO shall be lower.

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