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, 45 units @ $25 per unit.

Jun 17: Inventory purchased, 80 units @ $28 per unit.

Jun 25: Inventory purchased, 65 units @ $32 per unit.

Brilliant company sold 100 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 55 units from this lot were sold for $45 each. Assume both purchase of inventory and its sale are on account. (6 marks)

Answer 1

Weighted Average Cost Method

Date	Purchase	Sales	Balance
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
June 1	45	25	1,125				45	25	1,125
June 17	80	28	2,240				125	26.92	3365
June 25	65	32	2,080				190	28.6578	5,445
June 30				100	28.6578	2865.78	90	28.6578	2579.22

FIFO Method

Date	Purchase	Sales	Balance
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
June 1	45	25	1,125				45	25	1,125
June 17	80	28	2,240				80	28	2,240
June 25	65	32	2,080				65	32	2,080
June 30				45	25	1,125	25	28	700
June 30				55	28	1,540	65	32	2,080
				100		2,665	90		2,780

June 17	Purchase a/c Dr. To Accounts Payable a/c (Purchase made of 80 units @ $28/Unit)	2,240	2,240
June 30	Accounts Receivable a/c Dr. To Sales a/c (Sales Made of 55 Units @ $45/Unit)	2,475	2,475

Note - Assumed that sales was made on June 30 ( As date of sales is not clearly mentioned in Question)