Question

Discussion Question Luther Electronics sell a variety of gadgets including tablets. The business uses a perpetual inventory system and the LIFO method to account for inventory and began the third quarter of 2018 with merchandise inventory of 10 "PIXI 3G 7" tablets at a total cost of $134,200. During the quarter, the company completed the following transactions. July 8 Purchased 38 tablets at a total cost of $528,200. July 31 The sales for July were 18 tablets which yielded total sales revenue of $332,640. August 12 Owing to an increased demand for this product, 30 tablets were purchased on account at a cost of $13,905 each. In addition Luther paid $350 in cash on each tablet to have the inventory shipped from the vendor's warehouse to his warehouse. August 27 6 of the tablets purchased on August 12 were returned to the supplier, as they were defective. August 31 During the month 44 tablets were sold at a price of $19,960 each. ( 10 of these units sold were on account to a long standing customer of the business) September 4 A customer, to whom 8 tablets were sold during the first business day of August, returned 4 of the units, as they were not of the brand ordered. September 10 In preparation for the new school year, Luther purchased 35 tablets at a cost of $15.500 each; these were subject to a trade discount of 2% each. September 30 39 tablets were sold during September at a unit selling price of $22,275. September 30 An actual count of inventory was carried out which revealed that there were 8 units of the merchandise in the store room. Unless otherwise stated, assume that all purchases are on account and all sales are for cash. Required: i) Prepare a perpetual inventory record for this merchandise, to determine the company's cost of goods sold for the quarter and the value of ending. Given that selling & distribution and administrative costs for the quarter were $67,240 and$150,190 respectively, prepare an income statement for Luther Electronics for the quarter ended September 30, 2018. State the journal entries necessary to record the transactions on August 12 and August 31, assuming the company uses a: - Perpetual inventory system Periodic inventory system iv) Assuming that Luther used the perpetual system and weighted average method of inventory valuation, determine the value of ending inventory and cost of goods sold after the July 31 transaction

Answer 1

( I Answer use and perpetual gadgets en various so as per the given data the luther electronics sell various gadgets a inventory system. Firstly lets calculate company sales and prepare the perpetual inventory P103 so as per terms by using the ulfo method a

are Dale Purchase Quantity Unit cost cost of goods sold oty unit cost Total cost Total cost Inventory I quantity unit cest Onit 10 13u2o 13u2o 01.07.2015 Total cost - quantity x Unit cost (08-07-18 38 13900 528200 38 13900 10 31-67-2018 18480 332640 1342o 13900 Tь 1302D 12-08-18 13905 417150 20 113900 13905 (27-08-18 - 6 13905 -83430 134 20 (as they were defe ctive) 2o 13900 15905 24 278000 ID 13420 13 900 20 31-08-20 333720 Qu 13905 10 55606 15420 13900 (returned)

13900 13420 100218 135 14725 515375 1390o 14725 147 25 1515375 3609-18 55600 ºs 134 20 2 68 ud 134 20 Physical 1377295 1486575 Total Now lets calculate the total sales reve sue rou 332640 Casper data in question) sales for July 31st sales for august 31st salles retuon 19960. 878240 79800 868755 798400 sales of xu september

Total sales 1999765 July sales + August sales & september sales & not oro Total sals - Now lets the prepare data. the income statement for Total sales 1999765 The cost of goods 486575 sold Gooss margin 513190 (Total sales - cost of 9000 sold) operating expenses The transport costs 350 x 30 1000 selling and distribution 67,200 150190 Administrative 227 930 Total Operating income be 2852 60 the income will (total sales Operating errero

di) Tournal entries Perpetual Inventory systems Date Particulars in Amt DX Ant CX 12.08.18 47150 417150 Purchase ale Dr To account recei -voole (The Purchase made for laptops) 8787240 31.08 18 cash/band ale Dr To sale of lap ak 87872uo (uu laptops sales). record 31.08.18 61 420 G1726 cash/bank alc Dr To sare of lap a le (cot of goods sold) @ 13900 x 20 - 278000 260920 13905X QU2333920) Perodia Inventory Darticular Amt Date Amt DV 12.08.18 41750 purchases acc Dr To accounts recivable ui750 C30 laptops purchased) 31.08.18 878 7rup cash / bank ale Dr To sale of laptop are (uy laptors sold) Rax7 и 0

. Perpetual Inventory record The average method of inventory upto July 31st Date Purchases Inventory cost of goods sty luc TL 1 aty uc 01-07-18 10134 20 u8 13800 08.07 183 8 13900 529 200 13800 ?u8400 30 13800 31-07-18