Question

Exercise 8-09 Swifty Company sells one product. Presented below is information for January for Swifty Company. Jan. 1 4 11 13 20 27 Inventory Sale Purchase Sale Purchase Sale 103 units at $5 each 82 units at $8 each 82 units 135 units at $7 each 102 units at $9 each 167 units at $7 each 108 units at $11 each Swifty uses the FIFO cost flow assumption. All purchases and sales are on account.

Answer 1

Solution:

a.) Journal entries:

No.of event	Date	Account title and Explanation	Debit	Credit
1.)	Jan.4	Account Receivable	$656
		Sales (82 ×$8)		$656
		(To record the sale)
2.)	Jan.11	Purchase (135 ×$7)	$945
		Accounts Payable		$945
		(To record the cost of inventory)
3.)	Jan.13	Account Receivable	$918
		Sales (102 ×$9)		$918
		(To record the sale)
4.)	Jan.20	Purchase (167 × $7)	$1,169
		Account payable		1,169
		(To record the cost of inventory)
5.)	Jan.27	Account Receivable	$1,188
		Sales (108 ×$11)		$1,188
		(To record the sale)
6.)	Jan.31	Inventory (113 units ×$7)	$791
		Cost of goods sold ($515+$2114 - $791)	$1,838
		Purchase ($945+$1,169)		$2,114
		Inventory (103 ×$5)		$515
		( To record the ending inventory)

*

Total units = 103+ 135+167 =405 units

Sales units =82+102+108 =292units

Ending inventory =113units(405 -292)

b.) Gross profit using the periodic system:

Sales revenue ($656 +$918+$1,188)	$2,762
Cost of goods sold	$1,838
Gross profit	$924

c.) Journal entries:

No.of event	Date	Account title and Explanation	Debit	Credit
1.)	Jan.4	Account Receivable	$656
		Sales (82×$8)		656
		(To record the sale)
2.)		Cost of goods sold	$410
		Inventory (82 ×$5)		$410
		(To record the cost of inventory)
3.)	Jan.11	Inventory (135 ×$7)	$945
		Accounts payable		$945
		(To record the cost of inventory )
4.)	Jan.13	Account Receivable	$918
		Sales (102 ×$9)		$918
		(To record the sale)
		Cost of goods sold	$672
		Inventory (21×$5units)+(81 ×$7) $105+$567		$672
		(To record the cost of inventory)
5.)	Jan.20	Purchase (167 ×$7)	$1,169
		Account payable		$1,169
		(To record the cost of inventory)
6.)	Jan.27	Account Receivable	$1,188
		Sale (108 ×$11)		$1,188
		(To record the sale)
7.)		Cost of goods sold	$756
		Inventory (54 × $7) +(54×$7)		$756
		(To record the sale of inventory )
8.)	Jan.31	Inventory (113 ×$7)	$791
		Cost of goods sold ($515+$2,114 - $791)	$1,838
		Purchase ($945 + $1,169)		$2,114
		Inventory (103 × $5)		$515
		(To record the ending inventory)

*

Jan. 13 cost of goods sold

=21(103-82) beginning inventory

So 21 units cost $5

Then, 102 -21= 81, 81 units cost $7

*

Jan. 27 cost of goods sold:

54 units(135 - 81) remaining units of 13 January, then cost $7 per unit

54(108 -54), 54 units,

We take 54 units from 167 units whose purchase on 20 January and cost per unit$7.

d. )

Gross profit using the perpetual system:

Sales Revenue (82×$8)+(102 ×$9)+(108 ×$11)($656+$918+$1,188)	$2,762
Cost of goods sold	$1,838
Gross profit	$924