Question

Busi 2221 Hand-out Assignment Chapter 6 Due: November 6, 2019 Chapter 6 Hand-out Assignment Question 1 Gabbins Company uses the perpetual inventory system and the FIFO cost formula. Purchases Sales Selling Units Unit Cost Units Price Mar 1 Beginning inventory 100 $50 1 3 Purchase 60 S60 Sales 20 $100 10 Purchase 200 $701 16 Sales 80L $110 19 Sales 805110 80 25 Sales 50 $110 30 Purchase 40 $75 Instructions a) Using the inventory and sales data above, calculate the value assigned to cost of goods sold in March and to the ending inventory at March 31. b) Prepare the journal entries to record the sales on March 4 and March 19. All sales are made on credit. о не се

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Answer 1

Correct Answer:

	FIFO
Cost of Goods Sold	$ 18,600
Ending Inventory	$ 7,000.00

Date	General journal	Debit	Credit
04-Mar	Account receivable	$          7,000.00
	sale		$       7,000.00
	(to record sale of inventory)
	Cost of goods sold	$          4,100.00
	Inventory		$       4,100.00
	(to record decrease of inventory)
19-Mar	Account receivable	$          8,800.00
	sale		$       8,800.00
	(to record sale of inventory)
	Cost of goods sold	$          5,600.00
	Inventory		$       5,600.00
	(to record decrease of inventory)

Working:

Cost of Goods Available for sale
		Units	Cost per unit	value
Beginning Inventory	01-Mar	100	$                     50.00	$                   5,000.00
Purchases	03-Mar	60	$                     60.00	$                   3,600.00
Purchases	10-Mar	200	$                     70.00	$                 14,000.00
Purchases Return	30-Mar	40	$                     75.00	$                   3,000.00
Total		400		$                 25,600.00

	FIFO
A	Total Units Available for sale			400		$    25,600.00
	Units Sold			280
	Ending Inventory Units			120
	Cost of Goods Sold		60		$                         60.00	$      3,600.00
			10		$                         50.00	$          500.00
			80		$                         70.00	$      5,600.00
			80		$                         70.00	$      5,600.00
			40		$                         70.00	$      2,800.00
			10		$                         50.00	$          500.00
B	Cost of Goods Sold		280	units		$    18,600.00
A-B	Ending Inventory		120	units		$      7,000.00

End of answer.

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