Question

solve problem 3 complete

Lact-n, frt-cus Ising the cest iqures computed soove, rewer the lolowing quesions 2. Prepare the necessary journal enbies in ganeral jcurral fom) to adjuest the accouning Lincoin Company as of March 31, (Explanations may te amtled: a. Which of the ree cost fow income tor the current year? Would tis awen be the case Exisin (5 points asaumpñons wil result in the company reperting the lowest et income for the current year? Would tis he smount of caih and cash squvalerts hat shouid be reperted in he b. Which of the three coset flow assumplons wil nosut in the highest incoms tax expanse for te yeer? woud you esget this usaly tobe he case? Exglein (5 points) Problem 4 (25 points) sheot dated March 31.(5 points Problem 2 (25 paints and the purchases during the ourrant yoar, were as follows: Computers &Friends sells computer peripherals At Decamber 31, 2018,Computers&Frienc invenlory amounted to $54,000. Duing the first week in January 2018, the cempany mau purchase and one sale. Thace tansacians were as follows Jan. 1 Beginning inventory Mar. 8 Purchase. Aug. 11 Purchese Oct. 23Purchaso 30 units $300- Jan. 2 Purchesed 120 keyboerds and 30 printors from HP. The total cost ct these machines uns @ $310 50 unts g $350 10 unts $400 was $48,020. Discount terms 2'10, n30. Jan. 6 Scid 75 different types of products an accourt to Georges netail store. The sotal saies prige was 564,000. The total coet of these 75 units to Computers&Friends was $29,700 Total available for sae..15 uns Cemputers & Friends tas a fullime acccuntant and a comouter based accourting sysiem hs records sales at the gross salos price and purchases at net cost accounts receivable, inventory, and accounts payable. On August 15, ABC Wholesale Me. said 110 unts. The renaing unts ren-no December 31, the end of Altman Electric's fiscal year and martans subsidiary rnstructions 1. Compute the cost of goods sold ralating to the sale on August 15 and the ending using the foilowing oost flow essumptions. (15 points) 1. Brilelly desorbe the aperating cycle of a merchandising company. Idenily the assets and iabitios drectly affected by this cycle. (5 points) 2. Prepare joumal entries to record these transactions, assuming Computers&Friends uses a perpelvel inventcry system. (5 points) (Show the muwmber of units and the unt costs of each layer) 3. Compute the balance in the Inventory control account at the close of business on January 5. (4 points) Cost Inventory at Dec. 31 Goods 4 Prepare jounal entries to reoced the two transactions, assuming that Computers& Friends uses a periodic inventory system. (5 points s. Compute the cost of goods sold (COGS) for the two weeks of Jamuary assuming une of u periodic system. (Use your answor to part 3.as the ending inventory.) (5 points) a Average cost b First-in, first-out onitet one compound ounal erty cash eaavalients that should be epoted in te ASC Wholesale Inc uses a perpetsual compary neporting the lowest nelt nvetory syesam. The teginning invertoxy of a partoular produet system this ahways be the case? Explain. (5 poins) a. Which of the thvee et Wous you expect Prsbeem 4 (as peints December 31.2018. Cemputors & Frends week in January 2018, 1he 30 unts $300 $ 8.000 company made only one Oct 23 Purchase to 554,000 During the irst 50 unts Total avalable for se113 unts $350- 17,500 purchase and one On Auguet 15. ABC olesale inc greducts on account to Oeonges retail store The total otal cosl of these 75 units to Computers& Foends wa December 31, the end of Atman Electic's Sscal year 61330 sold 110 unts The remaining unts remaned in Sold 75 dfferent types of was $64,000. The total cost of these 1. Compute the cost of goods sold selating to the using the following Bow Camputers & Friends has a -accontant recoros sales at the gross sakes price and cost tow sesumptions (15 points) net cost and mainlaine subsidhiary ledge (Shew the nomber af units and the unt coats of each laer) sale on August 15 and the and sccounts palureng eneing inventory of units 1. Briey describe tne opering cydle Katlinies dredtly a 2. Prepore journal enties to recerd these transactions perpetual eventory sysiom. (5 points) cycle of a merchandising campany, ldenthy the as aflected by this cycle (5 points) Cost of Goods Sold at Dec.31 Average cost Invertary contral aucount at the close of business 4,9626,888 S 750 Compute the balance in the 4. Prepare jourmal entries to record the two transactions uses a periodic inventory system (5 points) ransactions, assuming that Comp 36, 60D Compude the coet of goods soid (CoGS) tor the two weeks of January s perlodic system. (use your answer to part 3. as ve ending nventory)ts points)

Answer 1

Answer :-

*Average cost method :-

Total units purchased = 125

Total units sold = (110)

No.Of unsold units = 15.

Units in hand as on the date of sale 15 august = 115.

Average cost per unit for 115 units = {30($300) + 35($310) + 50($350)} / 115 = $324.78 per unit.

# Cost of goods sold as per average cost = average cost per unit × total units sold.

= $324.78 × 110

= $ 35,726.086

Value of closing inventory as per average cost = average cost for 125

Weighted cost of units purchased = $41,350

Total units purchased = 125

Weighted average cost of units purchased = $41,350 ÷ 125 = $330.80 per unit.

Cost of goods unsold = average cost per unit of 125 units × units remain unsold = $330.80× 15 units $4,962.

# cost of goods unsold under average cost method = $4,962.

* FIFO Method :-

Under FIFO method, the assumption is that goods first purchased will be sold first.

Cost of goods sold shall be calculated as follows.

30 units*$300 + 35 units*$310 + 45 units *$350 = $ 35,600

# Cost of goods sold as per fifo = $35,600.

Value of goods remain unsold

5 units *$350 + 10 units *400 = $5,750.

# value of goods remain unsold as per FIFO = $5,750.

*note :-

Under FIFO , units remain unsold shall constitute latest goods.

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