Question

Nash Company sells one product. Presented below is information for January for Nash Company.

Jan. 1 Inventory 122 units at $4 each

4 Sale 101 units at $8 each

11 Purchase 164 units at $6 each

13 Sale 132 units at $9 each

20 Purchase 169 units at $6 each

27 Sale 106 units at $10 each

Nash uses the FIFO cost flow assumption. All purchases and sales are on account.

1. Assume Nash 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 116 units.

- Compute gross profit using the periodic system.     Gross profit=?

2. Assume Nash uses a perpetual system. Prepare all necessary journal entries.

- Compute gross profit using the periodic system.       Gross profit=?

Could explain more about how to calculate on part 2 about how to record sale and how to record the cost of inventory?

Answer 1

Ques 1
(a)	Jan.   4	Accounts Receivable	808
		Sales Revenue (101 X $8)		808
	Jan. 11	Purchases (164 X $6)	984
		Accounts Payable		984
	Jan. 13	Accounts Receivable	1,188
		Sales Revenue (132 X $9)		1,188
	Jan. 20	Purchases (169 X $6)	1,014
		Accounts Payable		1,014
	Jan. 27	Accounts Receivable	1060
		Sales Revenue (106 X $10)		1060
	Jan. 31	Inventory ($6 X 116)	696
		Cost of Goods Sold	1,790
		Purchases ($984 + $1,014)		1,998
		Inventory (122 X $4)		488
(b)	Sales Revenue ($808 + $1,188 + $1060)			$ 3,056
	Cost of goods sold			$ 1,790
	Gross profit			$ 1,266
Ques 2
(c)	Jan.   4	Accounts Receivable	808
		Sales Revenue (101 X $8)		808
		Cost of Goods Sold	404
		Inventory (101 X $4)		404
	Jan. 11	Inventory	984
		Accounts Payable (164 X $6.00)		984
	Jan. 13	Accounts Receivable	1,188
		Sales Revenue (132 X $9.00)		1,188
		Cost of Goods Sold	750
		Inventory ([(122-101) X $4) +
		(132-21 X $6)]		750
	Jan. 20	Inventory	1,014
		Accounts Payable (169 X $6)		1,014
	Jan. 27	Accounts Receivable	1060
		Sales Revenue (106 X $10)		1060
		Cost of Goods Sold	636
		Inventory [(53 X $6) +
		(53 X $6)]		636
(d)	Sales revenue			$3,056
	Cost of goods sold
	($404 +$750+636)			1,790
	Gross profit			$1,266