Question

Wooderson Company sells many products. Gizmo is one of its popular items. Below is an analysis of the inventory purchases and sales of Gizmo for the rest of the month of March. Wooderson Company uses the perpetual inventory system applying LIFO costing. all purchases are made on terms of 2/10, n30.

Purchases Sales

Units

Unit cost Units Selling price/unit

3/1 beginning inventory 62

$50

3/3 purchase 98

$55

3/4 sales

85 $100

Make a journal entry to record the March 4 sale and the cost of goods sold for that sale

Answer 1

Date	General Journal	Debit	Credit
March 4	Accounts receivable	$8,500
	Sales		$8,500
	( To record sales on account)
March 4	Cost of goods sold	$4,675
	Inventory		$4,675
	( To record cost of goods sold)

Cost of goods sold = Number of units sold x Cost per unit

= 85 x 55

= $4,675

sales = Number of units sold x Selling price per unit

= 85 x 100

= $8,500

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