Question

Question 1 (20 marks)

Brilliant Company uses the periodic inventory system. The company’s beginning inventory and later purchases of inventory during June 2020 were as below:

Jun 01: Beginning inventory, 30 units @ $22 per unit.

Jun 17: Inventory purchased, 95 units @ $25 per unit.

Jun 25: Inventory purchased, 50 units @ $28 per unit.

Brilliant company sold 110 units during the month of June 2020.

Required:

1. Calculate the cost of goods sold and ending inventory for June 2020 using both the Weighted Average cost and First in, first out (FIFO) method. (14 marks)

2. Also record the journal entries for the June 17 purchase of inventory and when 80 units from this lot were sold for $40 each. Assume both purchase of inventory and its sale are on account. (6 marks)

Answer 1

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A B с D E F G H K 1 price Cost w N A 22 660 units 1-Jun 17-Jun 25-Jun 30 95 50 175 25 2375 28 1400 4 5 75 4435 6 7 110 8 Sale at end of month Weighted average method Average cost per unit Cost of goods sold Ending inventory Date Account title Debit Credit 17-Jun Inventory 2375 Accounts payable (To record purchase of inventory) 9 2375 10 11 25.34285714 per unit 2787.714286 1647.285714 12 3200 13 17-Jun Accounts Recevible Sales/Revenue (To record sale of entry) Under FIFO method Cost of first 110 units 3200 14 15 Units 16 1-Jun 30 Cost 22 660 25 2000 2660 17 7-Jun 80 17-Jun cost of Goods Sold 2000 Inventory (To book cost of goods sold) 2000 18 110 19 Cost of goods sold 2660 20 Units Cost 25 375 In question it is mentioned that sale is occur from Jun-17 lot So for cost of goods sold, price is taken from that lot 21 15 17-Jun 25-Jun 22 50 28 1400 1775 23 65 24 Ending inventory 1775 Sheet202 Sheet203 Sheet204 Sheet205 Sheet206 Sheet207 Sheet208 Sheet209 Stats

For calculation ref:

A B с D E F G H 1 J units 1 2 43983 30 3 95 43999 44007 price Cost 22 =D2 C2 25 =D3*C3 28 =D4*C4 =SUM(D2:04) =SUM(E2:E4) 4 50 5 =SUM(C2:04) 6 7 110 8 Sale at end of month Weighted average method Average cost per unit Cost of goods sold Ending inventory Date Account title Debit Credit 43999 Inventory =C3*D3 Accounts payable =18 (To record purchase of inventory) 9 per unit 10 =E5/C5 =C9*C7 =(C5-C7) *C9 11 12 13 43999 Accounts Recevible =80*40 Sales/Revenue (To record sale of entry) Under FIFO method Cost of first 110 units =112 14 15 16 Units 43983 30 22 Cost =D16*C16 =D17*C17 =SUM(E16:E17) 17 43989 25 43999 Cost of Goods Sold 1=80*D3 Inventory =116 (To book cost of goods sold) =110-C16 =SUM(C16:C17) =E18 18 19 Cost of goods sold 20 Cost Units =95-C17 In question it is mentioned that sale is occur from Jun-17 lot So for cost of goods sold, price is taken from that lot 21 25 =D21*C21 43999 44007 22 28 50 =SUM(C21:C22) =E23 =D22*C22 =SUM(E21:E22) 23 24 Ending inventory E Sheet202 Sheet203 Sheet204 Sheet205 Sheet206 Sheet 207 Sheet208 Sheet209 Stats Ready