Question

Use the following transactions to complete the first month of the Billy Bob’s Barber Shop.

There should also be a second entry to account for the cost of merchandise sold and reduction of inventory using the FIFO method.

Feb. 1 Billy Bob purchased 40 bottles of shampoo/conditioner for $5/each. The bottles of shampoo/conditioner are to be held for resale. Billy uses the perpetual method. Billy uses the FIFO method to account for inventory.

8. Sold 22 bottles of the shampoo/conditioner at a price of $10/bottle receiving cash.

10. Billy Bob purchased 20 bottles of shampoo/conditioner for $5.50/each. The bottles of shampoo/conditioner are to be held for resale.

16. Sold 25 bottles of the shampoo/conditioner at a price of $12/bottle receiving cash

25. Purchased 20 bottles of shampoo/conditioner on account. The price was $6/each.The bottles of shampoo/conditioner are to be held for resale.

26. Sold 15 bottles of the shampoo/conditioner at a price of $10/bottle receiving cash

Answer 1

Date	Account Titles	Debit	Credit
Feb-01	Merchandise Inventory	$          200.00		=40*5
	Accounts Payable		$          200.00
Feb-08	Accounts Receivable	$          220.00		=22*10
	Sales Revenue		$          220.00
	Cost of Goods Sold	$          110.00		=22*5
	Inventory		$          110.00
Feb-10	Merchandise Inventory	$          110.00		=20*5.5
	Accounts Payable		$          110.00
Feb-16	Accounts Receivable	$          300.00		=25*12
	Sales Revenue		$          300.00
	Cost of Goods Sold	$          128.50		=18*5+7*5.5
	Inventory		$          128.50
Feb-25	Merchandise Inventory	$          120.00		=20*6
	Accounts Payable		$          120.00
Feb-26	Accounts Receivable	$          150.00		=15*10
	Sales Revenue		$          150.00
	Cost of Goods Sold	$            83.50		=13*5.5+2*6
	Inventory		$            83.50