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, 40 units @ $24 per unit. Jun 17: Inventory purchased, 85 units @ $30 per unit. Jun 25: inventory purchased, 60 units @ $35 per unit. Brilliant company sold 120 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 80 units from this lot were sold for $45 each. Assume both purchase of inventory and its sale are on account. (6 marks)

Answer 1

Ans a] Weighted Average Cost

Date	Particulars	Amount $	Units
Jun 1	Openinng stock 40 units at 24 per uit	960	40
Jun 17	Purchase of 85 units at 30 per unit	2550	85
Jun 25	Purchase of 60 units at 35 per unit	2100	60
	Total	5610	185
	Weighted Average Cost[5610/185]=	30.32
	Weighted Average Cost of 120 units[120x30.32]=	3638.40

Cost by FIFO

Date	Particulars	Amount $	Units
Jun 1	Openinng stock 40 units at 24 per uit	960	40
Jun 17	Purchase of 80 units at 30 per unit	2400	80
	Total	3360	120
	Per Unit Cost as per FIFO[3360/120]=	28

Ans b] Journal Entrfines for Jun 17

Date	Particulars	P.REF	Debit $	Credit $
Jun 17	Purchases To Accouts Payables [For recording credit purchase]		2550	2550
Jun 17	Accounts Receivables To Sales [For recording credit sales]		3600	3600