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: a. 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) b. 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)

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Answer 1

		FIFO	W. Avg. Cost
1	Ending Inventory	$2,780	$2,579
	Cost of Goods Sold	$2,665	$2,866
	FIFO
	Units	Unit Cost
	25	$28	$700
	65	$32	$2,080
	Ending Inventory		$2,780
	COGS =	Beginning inventory + Purchases - Ending inventory
	=	$1,125 + $4,320 - $2,780
	=	$2,665
	Weighted Average Cost
	45	$25	$1,125
	80	$28	$2,240
	65	$32	$2,080
	190		$5,445
	Weighted Average cost per unit		$28.66
	($5,445/190)
	Ending Inventory	$2,579
	(90 x $28.66)
	COGS =	Beginning inventory + Purchases - Ending inventory
	=	$1,125 + $4,320 - $2,579
	=	$2,866
2
	General Journal	Debit	Credit
	Purchase	$2,240
	Accounts Payable		$2,240
	Accounts Receivable	$2,475
	Sales		$2,475