1-Recording purchases at net amounts. Dill Co. records purchases at net amounts
ID: 2580471 • Letter: 1
Question
1-Recording purchases at net amounts. Dill Co. records purchases at net amounts and uses periodic inventories. Prepare entries for the following: June 11 Purchased merchandise on account, $15,000, terms 2/10, n/30. 15 30 Returned part of June 11 purchase, $800, and received credit on account. Prepared the adjusting entry required for financial statements. 2-FIFO and LIFO inventory methods. During June, the following changes in inventory item 27 took place: 1,400 units@ $36 800 units $54 700 units@ $45 400 units @ $75 1,000 units$60 500 units @ $66 June 1 Balance 14 Purchased 24 Purchased 8 Sold 10 Sold 29 Sold Perpetual inventories are maintained. Instructions What is the cost of the ending inventory for item 27 under the following methods? (Show calculations.) (a) FIFO. (b) LIFOo.Explanation / Answer
1.
June 11 Purchases $14700*
To Accounts payable $14700
15 Accounts payable $784**
To Purchase returns and allowances $784
30 Purchase discount $284***
To Accounts payable $284***
* $15000 * 0.98(1 - 0.02) = $14700.
** $800 * 0.98 = $784
*** ($15000 - $800) * 0.02 = $284.
2.
a. FIFO:
800 units * $54 = $43200
700 units * $45 = $31500
300 units * $54 = $16200
700 units * $45 = $31500
LIFO
800 units * $54 = $43200
700 units * $45 = $31500
800 units * $54 = $43200
200 units * $45 = $9000
Date Cost of goods available for sale Cost of goods sold Ending inventory June 1 1400 units * $36 = $50400 1400 units * $36 = $50400 8 400 units * $36 = $14400 1000 units * $36 = $36000 10 1000 units * $36 = $36000 14 800 units * $54 = $43200 800 units * $54 = $43200 24 700 units * $45 = $31500800 units * $54 = $43200
700 units * $45 = $31500
29 500 units * $54 = $27000300 units * $54 = $16200
700 units * $45 = $31500
Ending inventory $47700Related Questions
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