Johnson Corporation began 2016 with inventory of 13,000 units of its only produc

Question

Johnson Corporation began 2016 with inventory of 13,000 units of its only product. The units cost $9 each. The company uses a periodic inventory system and the LIFO cost method. The following transactions occurred during 2016:

a. Purchased 65,000 additional units at a cost of $12 per unit. Terms of the purchases were 3/10, n/30, and 100% of the purchases were paid for within the 10-day discount period. The company uses the gross method to record purchase discounts. The merchandise was purchased f.o.b. shipping point and freight charges of $0.50 per unit were paid by Johnson.

b. 1,300 units purchased during the year were returned to suppliers for credit. Johnson was also given credit for the freight charges of $0.50 per unit it had paid on the original purchase. The units were defective and were returned two days after they were received.

c. Sales for the year totaled 60,000 units at $19 per unit.

d. On December 28, 2016, Johnson purchased 5,300 additional units at $12 each. The goods were shipped f.o.b. destination and arrived at Johnson's warehouse on January 4, 2017.

e. 16,700 units were on hand at the end of 2016.

Determine the ending inventory and cost of goods sold for 2016

Explanation / Answer

Stock analysis

Opening

Qty

Purchases

Qty

Sales/Return

Qty

Ending Inventory Cost = 117000+44585 = $161585

COGS = $723000

Opening

Qty

Rate Amount

Purchases

Qty

Rate Amount

Sales/Return

Qty

Rate Amount Closing Qty Rate Amount 1. 13000 9 117000 13000 9 117000 2. 65000 12.05 783250 13000 9 117000 65000 12.05 783250 3. 1300 12.05 15665 13000 9 117000 63700 12.05 767585 4. 60000 12.05 723000 13000 9 117000 3700 12.05 44585 5. 5300 (transit) 12 63600 13000 9 117000 3700 12.05 44585 5300 (transit) 12 63600

Related Questions

Navigate

• Browse (All)
• Browse J
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.