Question

Mountain Cycles started May with 25 bicycles that cost $65 each. On May 16, Mountain bought 50 bicycles at S80 each. On May 31, Mountain sold 40 bicycles for $96 each. Requirements 1. Prepare Mountain Cycle's perpetual inventory record assuming the company uses the weighted-average inventory costing method. 2.Journalize the May 16 purchase of merchandise inventory on account and the May 31 sale of merchandise inventory on account Requirement 1. Prepare Mountain Cycle's perpetual inventory record assuming the company uses the weighted-average inventory costing method. Start by entering the beginning inventory balances. Enter the transactions in chronological order, calculating new inventory on hand balances after each transaction. Once all of the transactions have been entered into the perpetual record, calculate the quantity and total cost of nventory purchased, sold, and on hand at he end of the period. Abbreviation used: a Y Quan Tot, Otal Mountain Cycles Purchases Cost of Goods Sold Inventory on Hand Date QTY Unit Cost Tot. Cost QTY Unit Cost Tot. Cost QTY Unit Cost Tot. Cost

Answer 1

1) Perpetual inventory record

	Purchases			Cost of goods sold			Inventory on hand
Date	QTY	Unit Cost	Total Cost	QTY	Unit Cost	Total Cost	QTY	Unit Cost	Total Cost
May 1							25	65	1625
May 16	50	80	4000				75	75	5625
May 31				40	75	3000	35	75	2625
May 31	Balance					3000			2625

Journal entries

Date	account and explanation	debit	credit
May 16	Merchandise inventory	4000
	Account payable		4000
	(To record purchase)
May 31	Account receivable (40*96)	3840
	Sales revenue		3840
	(To record sales)
	Cost of goods sold	3000
	Merchandise inventory		3000
	(To record cost of goods sold)