Question

A company sells golf putters to customers, on account, at a selling price of $143 each. Assume that the company uses the FIFO inventory costing method and a perpetual inventory system. Additional information for the month is as follows (Click the icon to view the records.) Data Table Requirement 1 What is the cost of ending inventory? Date Quantity Unit Cost Item The cost of ending inventory using the FIFO method is $ 10 64 Apr. 1 Balance What is cost of goods sold for the month? 6 Sale 8 Purchase 15 72 The cost of goods sold using the FIFO method is $ 17 Sale 15 Requirement 2. Prepare the following two selected journal entries for the company. (Choose the explanation 30 Sale 2 Prepare the first of the two entries needed on the 17th Print Done Debit Credit Date Accounts and Explanation Apr. 17

Answer 1

Solution 1:

Computation of ending inventory COGS under FIFO
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-Apr	10	$64.00	$640.00	0	$0.00	$0.00	0	$0.00	$0.00	10	$64.00	$640.00
6-Apr	10	$64.00	$640.00	0	$0.00	$0.00	5	$64.00	$320.00	5	$64.00	$320.00
8-Apr	5	$64.00	$320.00	15	$72.00	$1,080.00	0	$0.00	$0.00	5	$64.00	$320.00
										15	$72.00	$1,080.00
17-Apr	5	$64.00	$320.00	0	$0.00	$0.00	5	$64.00	$320.00	5	$72.00	$360.00
	15	$72.00	$1,080.00				10	$72.00	$720.00
30-Apr	5	$72.00	$360.00	0	$0.00	$0.00	2	$72.00	$144.00	3	$72.00	$216.00
Total							22		$1,504.00	3		$216.00

Solution 2:

Date	Particulars	Debit	Credit
17-Apr	Accounts Receivables Dr	$2,145.00
	To Sale Revenue		$2,145.00
	(To record sales)
17-Apr	Cost of goods sold Dr	$1,040.00
	To Inventory		$1,040.00
	(Being inventories sold transferred to cost of merchandise sold account)