Week Three Exercise Assignment
Week Three Exercise Assignment
Inventory
1. Specific identification method. a. cost of goods sold. Cash $35,000 Sales $35,000 Woods Good $11,000 Wood Inventory $11,000 Moon Goods $4,000 Moon Inventory $4,000 Total Cost of goods $15,000 b. gross profit. Sales Revenue $35,000-Cost of Goods $15,000=$20,000 Gross Profit c. ending inventory. $21,800 (sunset)+ $31,200 (earth)=$53,000 (ending inventory)
2. Inventory valuation methods: basic computations.
3. Perpetual inventory system: journal entries.
a.
FIFO
• 1/2/20X3 Purchases on account: 500 units @ $6 = $3,000
Dr Merchandise Inventory 2,000
Cr Accounts Payable 2,000
• 1/15/20X3 Sales on account: 300 units @ $8.50 = $2,550
Dr Accounts Receivable 2,550
Cr Sales 2,550
Dr Cost of Goods Sold 1,200 (300 x $4)
Dr Merchandise Inventory 1,200
• 1/20/20X3 Purchases on Account: 200 units @ $5 = $1,000
Dr Merchandise Inventory 1,000
Cr Accounts Payable 1,000
• 1/25/20X3 Sales on Account: 300 units @ $8.50 = $2,550
Dr Accounts Receivable 2,550
Cr Sales 2,550
Dr Cost of Goods Sold 1,300 (200 x $4) + (100 x $5)
Dr Merchandise Inventory 1,300
LIFO
• 1/2/20X3 Purchases on account: 500 units @ $6 = $3,000
Dr Merchandis Inventory 2,000
Cr Accounts Payable 2,000
• 1/15/20X3 Sales on account: 300 units @ $8.50 = $2,550
Dr Accounts Receivable 2,550
Cr Sales 2,550
Dr Cost of Goods Sold 1,200 (300 x $4)
Dr Merchandise Inventory 1,200
• 1/20/20X3 Purchases on Account: 200 units @ $5 = $1,000
Dr Merchandise Inventory 1,000
Cr Accounts Payable 1,000
• 1/25/20X3 Sales on Account: 300 units @ $8.50 = $2,550
Dr Accounts Receivable 2,550
Cr Sales 2,550
Dr Cost of Goods Sold 1,400 (200 x $5) + (100 x $4)
Cr Merchandise Inventory 1,400
b. Calculate the balance in the firm’s Inventory account under each method.
2,000 + 1,000 = $3,000 merchandise available for sale
FIFO
3,000 - 1,200 - 1,300 = $500 ending inventory
LIFO
3,000 - 1,200 - 1,400 = $400 ending inventory
c. When
Inventory
1. Specific identification method. a. cost of goods sold. Cash $35,000 Sales $35,000 Woods Good $11,000 Wood Inventory $11,000 Moon Goods $4,000 Moon Inventory $4,000 Total Cost of goods $15,000 b. gross profit. Sales Revenue $35,000-Cost of Goods $15,000=$20,000 Gross Profit c. ending inventory. $21,800 (sunset)+ $31,200 (earth)=$53,000 (ending inventory)
2. Inventory valuation methods: basic computations.
3. Perpetual inventory system: journal entries.
a.
FIFO
• 1/2/20X3 Purchases on account: 500 units @ $6 = $3,000
Dr Merchandise Inventory 2,000
Cr Accounts Payable 2,000
• 1/15/20X3 Sales on account: 300 units @ $8.50 = $2,550
Dr Accounts Receivable 2,550
Cr Sales 2,550
Dr Cost of Goods Sold 1,200 (300 x $4)
Dr Merchandise Inventory 1,200
• 1/20/20X3 Purchases on Account: 200 units @ $5 = $1,000
Dr Merchandise Inventory 1,000
Cr Accounts Payable 1,000
• 1/25/20X3 Sales on Account: 300 units @ $8.50 = $2,550
Dr Accounts Receivable 2,550
Cr Sales 2,550
Dr Cost of Goods Sold 1,300 (200 x $4) + (100 x $5)
Dr Merchandise Inventory 1,300
LIFO
• 1/2/20X3 Purchases on account: 500 units @ $6 = $3,000
Dr Merchandis Inventory 2,000
Cr Accounts Payable 2,000
• 1/15/20X3 Sales on account: 300 units @ $8.50 = $2,550
Dr Accounts Receivable 2,550
Cr Sales 2,550
Dr Cost of Goods Sold 1,200 (300 x $4)
Dr Merchandise Inventory 1,200
• 1/20/20X3 Purchases on Account: 200 units @ $5 = $1,000
Dr Merchandise Inventory 1,000
Cr Accounts Payable 1,000
• 1/25/20X3 Sales on Account: 300 units @ $8.50 = $2,550
Dr Accounts Receivable 2,550
Cr Sales 2,550
Dr Cost of Goods Sold 1,400 (200 x $5) + (100 x $4)
Cr Merchandise Inventory 1,400
b. Calculate the balance in the firm’s Inventory account under each method.
2,000 + 1,000 = $3,000 merchandise available for sale
FIFO
3,000 - 1,200 - 1,300 = $500 ending inventory
LIFO
3,000 - 1,200 - 1,400 = $400 ending inventory
c. When