Question

Coronado Company sells one product. Presented below is information for January for Coronado Company. Jan. 1 Inventory 104 units at $5 each 4 Sale 79 units at $8 each 11 Purchase 145 units at $6 each 13 Sale 115 units at $9 each 20 Purchase 162 units at $6 each 27 Sale 107 units at $10 each Coronado uses the FIFO cost flow assumption. All purchases and sales are on account.

(a) Assume Coronado uses a periodic system. Prepare all necessary journal entries, including the end-of-month closing entry to record cost of goods sold. A physical count indicates that the ending inventory for January is 110 units. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 31 SHOW LIST OF ACCOUNTS

B. Compute gross profit using the periodic system. (Round answer to 0 decimal places, e.g. 6,578.)

C. Assume Coronaod Company uses a perpetual system. Prepare all necessary journal entries. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 6,578. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1

a)

Date	Account title	Debit	credit
Jan 1	No entry for beginning inventory
Jan4	Accounts receivable	632
	Sales revenue (79*8)		632
Jan 11	Purchase	870
	Accounts payable (145*6)		870
Jan 13	Accounts receivable	1035
	Sales revenue (115*9)		1035
Jan 20	Purchase	972
	Accounts payable (162*6)		972
Jan 27	Accounts receivable	1070
	Sales revenue (107*10)		1070
Jan 31	Inventory (ending inventory)	660
	Cost of goods sold (Bal)	1702
	Purchases		1842
	Inventory (beginning inventory) [104*5]		520

Under FIFO,units acquired first are sold first so ending inventory is left from last purchases .Cost of 110 units is left from purchase made on Jan 20 : 110*6 =660

b)Total sales revenue=2737

Gross profit = sales -cost of goods sold

             = 2737 -1702

            = 1035

c)

Date	Account title	Debit	credit
Jan 1	No entry for beginning inventory
Jan4	Accounts receivable	632
	Sales revenue (79*8)		632
Jan 4	Cost of goods sold	395
	Inventory (79*5)		395
Jan 11	Inventory	870
	Accounts payable (145*6)		870
Jan 13	Accounts receivable	1035
	Sales revenue (115*9)		1035
Jan 13	Cost of goods sold	665
	Inventory (working note) [125+540]`		665
Jan 20	Inventory	972
	Accounts payable (162*6)		972
Jan 27	Accounts receivable	1070
	Sales revenue (107*10)		1070
Jan 27	cost of goods sold	642
	Inventory		642

Working:

Jan 13:

Date	PURCHASE	COST OF GOODS SOLD	INVENTORY AT END
	Units	unit cost	Total	Units	unit cost	Total	Units	unit cost	Total
Jan 1							104	5	520
Jan 4				79	5	395	104-79=25	5	125
Jan 11	145	6	870				25	5	125
							145	6	870
Jan 13				25	5	125
				115-25= 90	6	540	145-90=55	6	330
Jan 20	162	6	972				55	6	330
							162	6	972
Jan 27				55	6	330
				107-55=52	6	312	162-52=110	6	660