The beginning inventory at Midnight Supplies and data on purchases and sales for
ID: 2549379 • Letter: T
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
Transaction
Number of Units
Per Unit
Total
Jan.
1
Inventory
7,500
$75.00
$562,500
10
Purchase
22,500
85.00
1,912,500
28
Sale
11,250
150.00
1,687,500
30
Sale
3,750
150.00
562,500
Feb.
5
Sale
1,500
150.00
225,000
10
Purchase
54,000
87.50
4,725,000
16
Sale
27,000
160.00
4,320,000
28
Sale
25,500
160.00
4,080,000
Mar.
5
Purchase
45,000
89.50
4,027,500
14
Sale
30,000
160.00
4,800,000
25
Purchase
7,500
90.00
675,000
30
Sale
26,250
160.00
4,200,000
Instructions
1.
Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in
Exhibit 3
, 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.
5.
Based upon the preceding data, would you expect the inventory using the last-in, first-out method to be higher or lower?
The beginning inventory at Midnight Supplies and data on purchases and sales for a three-month period ending March 31, are as follows:
Date
Transaction
Number of Units
Per Unit
Total
Jan.
1
Inventory
7,500
$75.00
$562,500
10
Purchase
22,500
85.00
1,912,500
28
Sale
11,250
150.00
1,687,500
30
Sale
3,750
150.00
562,500
Feb.
5
Sale
1,500
150.00
225,000
10
Purchase
54,000
87.50
4,725,000
16
Sale
27,000
160.00
4,320,000
28
Sale
25,500
160.00
4,080,000
Mar.
5
Purchase
45,000
89.50
4,027,500
14
Sale
30,000
160.00
4,800,000
25
Purchase
7,500
90.00
675,000
30
Sale
26,250
160.00
4,200,000
Instructions
1.
Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in
Exhibit 3
, 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.
5.
Based upon the preceding data, would you expect the inventory using the last-in, first-out method to be higher or lower?
CHART OF ACCOUNTS
Midnight Supplies
General Ledger
ASSETS
110
Cash
111
Petty Cash
120
Accounts Receivable
131
Notes Receivable
132
Interest Receivable
141
Merchandise Inventory
145
Office Supplies
146
Store Supplies
151
Prepaid Insurance
181
Land
191
Office Equipment
192
Accumulated Depreciation-Office Equipment
193
Store Equipment
194
Accumulated Depreciation-Store Equipment
LIABILITIES
210
Accounts Payable
221
Notes Payable
222
Interest Payable
231
Salaries Payable
241
Sales Tax Payable
EQUITY
310
Owner, Capital
311
Owner, Drawing
312
Income Summary
3. Determine the gross profit from sales for the period.
4. Determine the ending inventory cost as of March 31.
5. Based upon the preceding data, would you expect the inventory using the last-in, first-out method to be higher or lower?
Higher
Lower
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. 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.
PAGE 10
JOURNAL
ACCOUNTING EQUATION
1
2
3
4
REVENUE
410
Sales
610
Interest Revenue
EXPENSES
510
Cost of Merchandise Sold
515
Credit Card Expense
516
Cash Short and Over
520
Salaries Expense
531
Advertising Expense
532
Delivery Expense
533
Insurance Expense
534
Office Supplies Expense
535
Rent Expense
536
Repairs Expense
537
Selling Expenses
538
Store Supplies Expense
561
Depreciation Expense-Office Equipment
562
Depreciation Expense-Store Equipment
590
Miscellaneous Expense
710
Interest Expense
Date
Transaction
Number of Units
Per Unit
Total
Jan.
1
Inventory
7,500
$75.00
$562,500
10
Purchase
22,500
85.00
1,912,500
28
Sale
11,250
150.00
1,687,500
30
Sale
3,750
150.00
562,500
Feb.
5
Sale
1,500
150.00
225,000
10
Purchase
54,000
87.50
4,725,000
16
Sale
27,000
160.00
4,320,000
28
Sale
25,500
160.00
4,080,000
Mar.
5
Purchase
45,000
89.50
4,027,500
14
Sale
30,000
160.00
4,800,000
25
Purchase
7,500
90.00
675,000
30
Sale
26,250
160.00
4,200,000
Instructions
1.
Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in
Exhibit 3
, 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.
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
Total Sales = $ 19875000 (125250 Units) From above table
Cost of merchandise Sold = $10891875 (125250 Units) From Above Table
Journal Entries for sales & COMS
Gross Profit = Sales - cost of merchadise sold (COMS)
Gross Profit = 19875000 - 10891875
Gross Profit = $8983125
Ending Inventory = (3750 x 89.50) + (7500 x 90.00)
Ending Inventory = 335625 + 675000 = $1010625
Answer 5
Because as per data the cost of purchase are in increamental manner through out the period so we may believe that cost of ending inventory as per LIFO method will be less in comparision of FIFO method because low prices goods will be in stock on ending day i.e. March 31
So above is the answers to the problems.
Date Purchase Sales Cost of Merchandise Sold(COMS) Inventory Units Price Amount Unit Price Amt Unit Price Amt Unit Price Amt Jan1 - - - - - - - - - 7500 75 562500 Jan 10 22500 85 1912500 - - - - - - 7500 75 562500 22500 85 1912500 Jan 28 - - - 11250 150 1687500 7500 75 562500 18750 85 1593750 3750 85 318750 Jan 30 - - - 3750 150 562500 3750 85 318750 15000 85 1275000 Feb 5 - - - 1500 150 225000 1500 85 127500 13500 85 1147500 Feb 10 54000 87.50 4725000 - - - - - - 13500 85 1147500 54000 87.50 4725000 Feb 16 - - - 27000 160 4320000 13500 85 1147500 40500 87.50 3543750 13500 87.50 1181250 Feb 28 - - - 25500 160 4080000 25500 87.50 2231250 15000 87.50 1312500 Mar 05 45000 89.50 4027500 - - - - - - 15000 87.50 1312500 45000 89.50 4027500 Mar 14 - - - 30000 160 4800000 15000 87.50 1312500 30000 89.50 2685000 15000 89.50 1342500 Mar 25 7500 90 675000 - - - - - - 30000 89.50 2685000 7500 90.00 675000 Mar 30 - - - 26250 160 4200000 26250 89.50 2349375 3750 89.50 335625 7500 90.00 675000 Total 129000 11340000 125250 19875000 125250 10891875 11250 1010625Related Questions
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