Question

The Shirt Shop had the following transactions for T-shirts for 2016, its first year of operations:              Jan. 20   Purchased   400 units @ $8   =   $   3,200   Apr. 21   Purchased   200 units @ $10   =      2,000   July 25   Purchased   280 units @ $13   =      3,640   Sept. 19   Purchased   90 units @ $20   =      1,800   During the year, The Shirt Shop sold 810 T-shirts for $20 each. Record the above transactions in general journal form and post to T-accounts using (1) FIFO, (2) LIFO, and (3) weighted average. Use a separate set of journal entries and T-accounts for each method. Assume all transactions are cash transactions.

b.

Record the above transactions in general journal form and post to T-accounts using (1) FIFO, (2) LIFO, and (3) weighted average. Use a separate set of journal entries and T-accounts for each method. Assume all transactions are cash transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

b.
(1).	FIFO:
	Date	Account titles			Debit	Credit
	Jan 20.	Inventory			3200
		Cash				3200
		(Goods purchased)
	Apr 21.	Inventory			2000
		Cash				2000
		(Goods purchased)
	July 25.	Inventory			3640
		Cash				3640
		(Goods purchased)
	Sept 19.	Inventory			1800
		Cash				1800
		(Goods purchased)
	Dec 31.	Cash	(810*20)		16200
		Sales				16200
		(Goods sold)
		Cost of goods sold		(Note:1)	7930
		Inventory				7930
		(Cost of goods sold recorded)
	Note:1
	Under FIFO method,Goods purchased first are sold first.
	810 units sold as follows:
				$
	Jan 20.	400 units at $ 8		3200
	Apr 21.	200 units at $ 10		2000
	July 25.	210 units at $ 13		2730
	Total			7930

T-accounts:
	Inventory				Cash
Date	Debit	Date	Credit		Date	Debit	Date	Credit
Jan 20.	3200	Dec 31.	7930		Dec 31.	16200	Jan 20.	3200
Apr 21.	2000						Apr 21.	2000
July 25.	3640						July 25.	3640
Sept 19.	1800						Sept 19.	1800
	10640		7930			16200		10640
Bal.	2710				Bal.	5560
	Sales					Cost of goods sold
Date	Debit	Date	Credit		Date	Debit	Date	Credit
		Dec 31.	16200		Dec 31.	7930

Debit Credit 3200 3200 Apr 21. 2000 2000 3640 3640 (2). LIFO: Date Account titles Jan 20. Inventory Cash (Goods purchased) Inventory Cash (Goods purchased) July 25. Inventory Cash (Goods purchased) Sept 19. Inventory Cash (Goods purchased) Dec 31. Cash (810*20) Sales (Goods sold) Cost of goods sold (Note:2) Inventory (Cost of goods sold recorded) 1800 1800 16200 162001 9360 93601 Note: 1 Under LIFO method, Goods purchased last are sold first. 810 units sold as follows:

810 units sold as follows: $ 1800 3640 2000 Sept 19.90 units at $ 20 July 25.280 units at $ 13 Apr 21. 200 units at $ 10 Jan 20. 240 units at $ 8 (810-90-280-200) Total 1920 9360 Credit 9360 Date Dec 31. T-accounts: Inventory Date Debit Date Jan 20. 3200 Dec 31. Apr 21. 2000 July 25. 3640 Sept 19. 1800 10640 Bal. 1280 Cash Debit Date 16200 Jan 20. Apr 21. July 25. Sept 19. 16200 5560 Credit 3200 2000 3640 1800 9360 10640 Bal. Sales Debit Date Date Credit Date Cost of goods sold Debit Date 9360 Credit Dec 31. 16200 Dec 31.

Credit Debit 3200 3200 Apr 21. 2000 2000 (3). Weighted average: Date Account titles Jan 20. Inventory Cash (Goods purchased) Inventory Cash (Goods purchased) July 25. Inventory Cash (Goods purchased) Sept 19. Inventory Cash (Goods purchased) Dec 31. Cash (810*20) 3640 3640 1800 1800 16200 Sales 16200 8886 (Goods sold) Cost of goods sold (Note:2) Inventory (Cost of goods sold recorded) 8886 Note:1 Under weighted average, Cost of goods sold=Units sold*Weighted average cost per unit Weighted average cost per unit=Cost of goods available for sale/Units available for sale

Weighted average cost per unit=Cost of goods available for sale/Units available for sale Date Units Rate Cost a b a*b Jan 20. 400 8 3200 Apr 21. 200 10 2000 July 25. 280 13 36401 Sept 19. 90 20 1800 Total 970 10640 Weighted average cost per unit=10640/970=$ 10.97 Cost of goods sold=810*10.97=$ 8886 Cash Debit Credit Date Date Credit 3200 88861 Dec 31. 16200 Jan 20. T-accounts: Inventory Date Debit Date Jan 20. 3200 Dec 31. 2000 July 25. 3640 Sept 19. 1800 10640 Bal. 1754 Apr 21. 2000 3640 Apr 21. July 25. Sept 19. 16200 1800 8886 10640 Bal. 5560 Sales Debit Cost of goods sold Debit Date Date Date Credit Date Credit Dec 31. 16200 Dec 31. 8886