Accounting 27th Edition ISBN 978-1-337-27209-4, PR 7-1A page 384. OBJ. 2, 3 PR 7

Question

Accounting 27th Edition ISBN 978-1-337-27209-4, PR 7-1A page 384.

OBJ. 2, 3 PR 7-1A FIFO perpetual inventory The beginning inventory at Midnight Supplies and data on purchases and sales for a three-month period ending March 31, are as follows: Number Per of Units Unit Total DateTransaction Jan. 1 Inventory 7,500 22,500 75.00 $ 562,500 85.00 1,912,500 10 Purchase 28 Sale 30 Sale 11.250150.00 1687,500 562,500 225,000 54,000 8750 4,725,000 27,000 160.00 4,320,000 25,500 160.00 4,080,000 89.50 4,027,500 30,000 160.00 4,800,000 675,000 26,250160.00 4,200,000 3,750 1,500 150.00 150.00 Feb. 5 Sale 10 Purchase 16 Sale 28 Sale Mar. 5 Purchase 45,000 14 Sale 25 Purchase 30 Sale 7,500 90.00 Instructions 1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3, using the first-in, first-out method. 2. Determine the total sales and the total cost of merchandise sold for the period. Jour- nalize 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.

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 $ 1-Jan 7500 75 562500 10-Jan 22500 85 1912500 7500 75 562500 22500 85 1912500 28-Jan 7500 75 562500 3750 85 318750 18750 85 1593750 30-Jan 3750 85 318750 15000 85 1275000 5-Feb 1500 85 127500 13500 85 1147500 10-Feb 54000 87.5 4725000 13500 85 1147500 54000 87.5 4725000 Ffeb 16 13500 85 1147500 13500 87.5 1181250 40500 87.5 3543750 28-Feb 25500 87.5 2231250 15000 87.5 1312500 5-Mar 45000 89.5 4027500 15000 87.5 1312500 45000 89.5 4027500 14-Mar 15000 87.5 1312500 15000 89.5 1342500 30000 89.5 2685000 25-Mar 7500 90 675000 30000 89.5 2685000 7500 90 675000 30-Mar 26250 89.5 2349375 3750 89.5 335625 7500 90 675000 TOTAL 129000 11340000 125250 10891875 11250 1010625 Req 2: Total sales (1687500+562500+225000+4320000+4080000+4800000+4200000): $ 19875,000 Total cost of Goods sold: $ 10891875 Journal entries: Accounts receivable Account Dr. 19875000        Sales revenue 19875000 Cost of Goods sold Account Dr. 10891875      Inventory Account 10891875 Req 3: Gross profit: Sales revenue 19875000 Less: Cost of Goods sold 10891875 Gross profit: 8983125 Req 4: Ending Inventory: $ 1010625 Req 5: Yes, it is higher

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