Question

Crane Company sells one product. Presented below is information for January for Crane Company. 300 units at $12 each Nov. 1 Inventory 5 Purchase 190 units at $13 each 430 units at $20 each 10 Sale 430 units at $12.50 each 15 Purchase 440 units at $21 each 21 Sale 350 units at $12.80 each 30 Purchase Crane uses the FIFO cost flow assumption. All purchases and sales are on account

Answer 1

Gross Profit using Periodic system is:

Sales
Nov 10	430*20	8,600
Nov 21	440*21	9,240
		17,840
Less: Cost of goods sold		10,820
Gross Profit		7,020

Working:

FIFO	Cost of goods available for sale			Cost of goods sold			Ending Inventory
	No. of units	Cost per unit	Cost of goods available for sale	No. of units	Cost per unit	Cost of goods sold	No. of units	Cost per unit	Ending Inventory
Beginning Inventory Nov 1	300	12	3,600	300	12	3,600
Purchases:
Nov 5	190	13	2,470	190	13	2,470
Nov 15	430	12.5	5,375	380	12.5	4,750	50	12.5	625
Nov 30	350	12.8	4,480				350	12.8	4,480
Total	1,270		15,925	870		10,820	400		5,105

Gross Profit using Perpetual method is :

Sales
Nov 10	430*20	8,600
Nov 21	440*21	9,240
		17,840
Less: Cost of goods sold		10,820
Gross Profit		7,020

FIFO-Perpetual
Date	Goods Purchased				Cost of goods sold				Ending Inventory
	Units	@	Cost per unit	Cost of purchase	Units sold	@	Cost per unit	Cost of goods sold	Units	@	Cost per unit	Ending balance
Nov-01									300.00		12.00	3,600.00
Balance									300.00			3,600.00
Nov-05	190.00		13.00	2,470.00					300.00		12.00	3,600.00
									190.00		13.00	2,470.00
Balance									490.00			6,070.00
Nov-10					300.00		12.00	3,600.00
					130.00		13.00	1,690.00	60.00		13.00	780.00
Balance									60.00			780.00
Nov-15	430.00		12.50	5,375.00					60.00		13.00	780.00
									430.00		12.50	5,375.00
Balance									490.00			6,155.00
Nov-21					60.00		13.00	780.00	50.00		12.50	625.00
					380.00		12.50	4,750.00	-		-	-
Balance									50.00			625.00
Nov-30	350.00		12.80	4,480.00					50.00		12.50	625.00
									350.00		12.80	4,480.00
Balance					870.00			10,820.00	400.00			5,105.00

Journal entries using Periodic method is:

Date	Particulars	L.F	Amount ($)	Amount ($)
Nov-05	Purchases		2470
	Acounts payable (190*13)			2470
Nov-10	Cash		8600
	Sales (430*20)			8600
Nov-15	Purchases		5375
	Acounts payable (430*12.5)			5375
Nov-21	Cash		9240
	Sales (440*21)			9240
Nov-30	Purchases		4480
	Acounts payable (350*12.8)			4480