Question

Question: 1 On December 1, 2020, Company had the following account balances. Debit Cash $ 7,200 Accumulated Depreciation- Equipment Accounts receivable 4.600 Accounts Payable Inventory 12.000 Salaries and Wages Payable Supplies 1,200 Owner's Capital Equipment 22.000 $47.000 Credit $ 2,200 4,500 1.000 39,300 $47.000 During December, the company completed the following summary transactions. December 5 Purchased golf bags, clubs, and balls on account from Tiger Co. $1,200, FOB shipping point, terms 2/10, 1/60. Appropriate party paid freight on purchases $50. December 9 Received credit from Tiger Co.for merchandise returned $100. December 10 Sold merchandise on account to John traders $600, FOB shipping point, terms 2/15, 1/30. The cost of goods sold is $400. Appropriate party paid freight cost $20. December 12 Purchased golf shoes, sweaters, and other accessories on account from Classic Sportswear S450, FOB destination, terms 3/10, n/30. Appropriate party paid freight on purchases $50. December 16 Paid Tiger Co. in full. December 17 Received credit from Classic Sportswear for merchandise returned $50. December 20 Made sales on account to Chenzi traders $500, FOB Destination, terms 2/10, 1/30. Cost of goods sold is $300 Appropriate party paid freight cost $20. December 21 Paid Classic Sportswear in full December 23 Goods returned from Chenzi traders $100. The cost of goods sold is $30 December 30 Received payments from Chenzi traders in full. December 31 Received payments from John traders in full. Instructions a. Journalize the December transactions using both perpetual and periodic inventory system in a table side by side. b. Enter the December 1 balances in the ledger and post the December transactions and prepare a trail balance on December 31 (using perpetual inventory system).

Answer 1

Perpetual Inventory Periodic Inventory

Date	Particulars	Debit $	Credit $	Particulars	Debit $	Credit$
Dec 5	Inventory To Tiger Co [For material purchase]	1250	1250	Purchases To Tiger Co	1250	1250
Dec 9	Tiger Co To Inventory [For material return]	100	100	Tiger Co To Purchases	100	100
Dec 10	M/s John To Inventory To Gross Profit	600	400 200	M/s John To Inventory To COGS	600	400 200
Dec 12	Inventory To Classic Sportware [For material purchase FOB desti.]	450	450	Purchases To Classic Sportware	450	450
Dec 16	Tiger Co To Cash [Amt paid in full settlement ]	1150	1150	Tiger Co To Cash	1150	1150
Dec 17	Classic Sportwares To Inventory [For material return]	50	50	Classic Sportwares To Purchases [For material return]	50	50
Dec 20	M/s Chenji Tr To Inventory To Gross Profit	500	320 180	M/s Chenji Tr To Purchase To Gross Profit	500	320 180
Dec 21	Classic S To Cash [Amt paid in full settlement ]	400	400	Classic S To Cash [	400	400
Dec 23	Inventory Gross Profit To Chenji Tr [For material return]	30 70	100	Purchase COGS To Chenji Tr	30 70	100
Dec 30	Cash To Chenji Tr [Amt received in full settlement ]	400	400	Cash To Chenji Tr	400	400
Dec 31	Cash To John [Amt received in full settlement	600	600

Ans.2

Date	Particulars	LIFO	FIFO	Weighted Avg		Quantity
Jun 1	Op. Bal [a]	6400	6400	6400		80
Jun 3	Purchases [b]	23220	23220	23220		270
Jun 5	Sale [c]	30800	30800	30800		-220
	COGS[220X86 LIFO][80X80+140X86FIFO] [80X80+270X86=29620/350=84.63[b]	18920	18440	18618.60
	Gross Profit[a-b] [G1]	11880	12360	12181.40
Jun 9	Sales [d]	375	375	375		-15
	COGS[15X86 LIFO][15X86FIFO] [6400+23220-18618.60=11001.40/130 WA]	1290	1290	1269.45
	Gross Loss [G2]	-915	-915	-894.45

Date	Particulars	LIFO	FIFO	Weighted Avg	Quantity
Jun 11	Sales Return[30x140] [e]	4200	4200	4200	30
	COGS[86 LIFO,FIFO ,84.63 WA]	2580	2580	2538.90
	Gross Loss on Sales Ret [G3]	1620	1620	1661.1
Jun 13	Purchases[110x92] [f]	10120	10120	10120	110
Jun 15	Purchase Return[20x92]	1840	1840	1840	-20
	Net Purchase	8280	8280	8280
Jun 17	Sales[130x152] [g]	19760	19760	19760	-130
	COGS[90X92+40X86 LIFO,FIFO] [6400+23220-18618.9-1269.45+2538.9 +8280=20550.55/(80+270-220-15+30+110+20]	11720	11720	9714.81
	Gross Profit [G1]	8040	8040	10045.19
Jun 19	Purchase [70x100] [h]	7000	7000	7000	70
	Closing Inventory[a+b-c-d+e+f-g+h]	15550	16030	17835.19	175
	Cost of goods sold[[c+d+g]	31980	30500	29602.86

Working of Gross Profit

Particulars	LIFO	FIFO	Weighted Avg
G.P from Sales 1 [G1]	11880	12360	12181.40
G.L from Sales 2 [G2]	-915	-915	-894.45
G.P reversed on Sales Ret. [G3]	-1620	-1620	-1661.10
G.P from Sales 3 [G4]	8040	8040	10045.19
Total Gross Profit	17385	17865	19671.04

Ans. 2b

From above table we get that Weighted Avg method gives highest inventory cost of 17835.19 and LIFO gives highest cost of goods sold of 31980