Question

Mountain Cycles started May with 5 bicycles that cost $48 each. On May 16, Mountain bought 30 bicycles at $55 each. On May 31, Mountain sold 15 bicycles for S90 each. Requirements 1. Prepare Mountain Cycle's perpetual inventory record assuming the company uses the FIFO 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 FIFO 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 inventory purchased, sold, and on hand at the end of the period. (Enter the oldest inventory layers first. Abbreviation used: QTY Quantity Tot. Total) Mountain Cycles Cost of Goods Sold on Hand Date QTY Unit Cost Tot. CostQTYU Unit Cost Tot. Cost QTY Unit Cost Tot. Cost May 1

Answer 1

Solution:

	Purchase			COGS			Inventory on hand
Date	Qty	Unit cost	Total cost	Qty	Unit cost	Total cost	Qty	Unit cost	Total cost
May-01							5	48	240
May-16	30	55	1650				5	48	240
							30	55	1650
May-31				5	48	240
				10	55	550	20	55	1100
Total	30		1650	15		790	20		1100

2)

Date	Particulars	Debit	Credit
May-16	Merchandise Inventory	1650
	Accounts Payable		1650
May-31	Accounts Receivable	1350
	Sales Revenue		1350
	Cost of Goods Sold	790
	Merchandise Inventory		790