The beginning inventory at Funky Party Supplies and data on purchases and sales
ID: 2464206 • Letter: T
Question
The beginning inventory at Funky Party Supplies and data on purchases and sales for a three-month period ending March 31, 2016, are as follows: Date Transaction Number of Units Per Unit Total Jan. 1 Inventory 3,000 $56.00 $168,000 10 Purchase 7,100 64.00 454,400 28 Sale 4,200 112.00 470,400 30 Sale 1,300 112.00 145,600 Feb. 5 Sale 500 112.00 56,000 10 Purchase 18,500 66.00 1,221,000 16 Sale 8,900 117.00 1,041,300 28 Sale 8,200 117.00 959,400 Mar. 5 Purchase 14,500 67.60 980,200 14 Sale 10,000 117.00 1,170,000 25 Purchase 3,400 68.00 231,200 30 Sale 8,000 117.00 936,000 Instructions 1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 4, using the first-in, first-out method. 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 and date your journal entry March 31. Refer to the Chart of Accounts for exact wording of account titles. 3. Determine the gross profit from sales for the period. 4. Determine the ending inventory cost as of March 31, 2016. 5. Based upon the preceding data, would you expect the inventory using the last-in, first-out method to be higher or lower?
Explanation / Answer
Answer FIFO Method Date Purchases Cost of Goods Sold Balance Unit Cost Total Unit Cost Total Unit Cost Total Jan-01 3,000 56.00 168,000 Jan-10 7,100 64.00 454,400 3,000 56.00 168,000 7,100 64.00 454,400 Jan-28 3,000 56.00 168,000 5,900 64.00 377,600 1,200 64.00 76,800 4,200 244,800 Jan-30 1,300 64.00 83,200 4,600 64.00 294,400 Feb-05 500 64.00 32,000 4,100 64.00 262,400 Feb-10 18,500 66.00 1,221,000 4,100 64.00 262,400 18,500 66.00 1,221,000 Feb-16 4,100 64.00 262,400 13,700 66.00 904,200 4,800 66.00 316,800 8,900 579,200 Feb-28 8,200 66.00 541,200 5,500 66.00 363,000 Mar-05 14,500 67.60 980,200 5,500 66.00 363,000 14,500 67.60 980,200 Mar-14 5,500 66.00 363,000 10,000 67.60 676,000 4,500 67.60 304,200 10,000 667,200 Mar-25 3,400 68.00 231,200 10,000 67.60 676,000 3,400 68.00 231,200 Mar-30 8,000 67.60 540,800 2,000 67.60 135,200 3,400 68.00 231,200 Total 43,500 2,886,800 41,100 2,688,400 Sales Date Sales Unit Cost Total Jan-28 4,200 112 470,400 Jan-30 1,300 112 145,600 Feb-05 500 112 56,000 Feb-16 8,900 117 1,041,300 Feb-28 8,200 117 959,400 Mar-14 10,000 117 1,170,000 Mar-30 8,000 117 936,000 Total 41,100 4,778,700 Cost of Goods Sold = $2,688,400 Total Sales = $4,778,700 Gross profit = Sales - Cost of Goods Sold Gross profit = $4,778700 - 2,688,400 = $2,090,300 Ending Inventory on Mar 31 Units Cost Total 2,000 68 135,200 3,400 68.00 231,200 5,400 366,400 Total Journal Entries Date Particulars Dr. Amt Cr. Amt. Jan-10 Merchandise Invetory Dr. 454,400 To Accounts Payable / Cash 454,400 Jan-28 Accounts Receivables Dr. 470,400 To Sales 470,400 Jan-28 Cost of Goods Sold Dr. 244,800 To Merchandise Inventory 244,800 Jan-30 Accounts Receivables Dr. 145,600 To Sales 145,600 Jan-30 Cost of Goods Sold Dr. 83,200 To Merchandise Inventory 83,200 Feb-05 Accounts Receivables Dr. 56,000 To Sales 56,000 Feb-05 Cost of Goods Sold Dr. 32,000 To Merchandise Inventory 32,000 Feb-10 Merchandise Invetory Dr. 1,221,000 To Accounts Payable / Cash 1,221,000 Feb-16 Accounts Receivables Dr. 1,041,300 To Sales 1,041,300 Feb-16 Cost of Goods Sold Dr. 579,200 To Merchandise Inventory 579,200 Mar-05 Merchandise Invetory Dr. 980,200 To Accounts Payable / Cash 980,200 Mar-14 Accounts Receivables Dr. 1,170,000 To Sales 1,170,000 Mar-14 Cost of Goods Sold Dr. 667,200 To Merchandise Inventory 667,200 Mar-25 Merchandise Invetory Dr. 231,200 To Accounts Payable / Cash 231,200 Mar-30 Accounts Receivables Dr. 936,000 To Sales 936,000 Mar-30 Cost of Goods Sold Dr. 540,800 To Merchandise Inventory 540,800 Answer 5. LIFO Date Purchases Cost of Goods Sold Balance Unit Cost Total Unit Cost Total Unit Cost Total Jan-01 3,000 56.00 168,000 Jan-10 7,100 64.00 454,400 3,000 56.00 168,000 7,100 64.00 454,400 Jan-28 4,200 64 268800 3,000 56.00 168,000 2,900 64.00 185,600 Jan-30 1,300 64.00 83,200 3,000 56.00 168,000 1,600 64.00 102,400 Feb-05 500 64.00 32,000 3,000 56.00 168,000 1,100 64.00 70,400 Feb-10 18,500 66.00 1,221,000 3,000 56.00 168,000 1,100 64.00 70,400 18,500 66.00 1,221,000 Feb-16 8,900 66.00 587,400 3,000 56.00 168,000 1,100 64.00 70,400 9,600 66.00 633,600 Feb-28 8,200 66.00 541,200 3,000 56.00 168,000 1,100 64.00 70,400 1,400 66.00 92,400 Mar-05 14,500 67.60 980,200 3,000 56.00 168,000 1,100 64.00 70,400 1,400 66.00 92,400 14,500 67.60 980,200 Mar-14 10,000 67.60 676,000 3,000 56.00 168,000 1,100 64.00 70,400 1,400 66.00 92,400 4,500 67.60 304,200 Mar-25 3,400 68.00 231,200 3,000 56.00 168,000 1,100 64.00 70,400 1,400 66.00 92,400 4,500 67.60 304,200 3,400 68.00 231,200 Mar-30 3,400 68.00 231,200 3,000 56.00 168,000 4,500 67.60 304,200 1,100 64.00 70,400 100 66.00 6,600 1,300 66.00 85,800 Total 43,500 2,886,800 41,100 2,730,600 Ending Inventory at March 31 FIFO LIFO Diff. 366,400 324,200 42,200 The Inventory cost is lower by $42200 in LIFO method than FIFO method.
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