Question

In: Accounting

Q. 5 Prospect Ltd., which uses FIFO method of inventory management, began in June with 75...

Q. 5 Prospect Ltd., which uses FIFO method of inventory management, began in June with 75 units of inventory that cost $15 each. During June, it completed the following inventory transactions: Units Unit Cost Unit Sale Price June 7 Purchase 20 $16 June 13 Sale 71 $25 June 19 Purchase 38 $18 June 27 Sale 42 $27 Required a) Prepare a perpetual inventory record for internal reporting purposes under FIFO method. (marks: 8) b) Journalise, with explanations, the above transactions. (marks: 5) c) Prepare T accounts for Inventory, cost of sales and revenue. (marks: 3) d) Compute gross profit for Prospect Ltd. for June. (marks:1)

Solutions

Expert Solution


Related Solutions

Q. 5 (Total Marks: 10) Supreme Ltd. began with an inventory of 60 signs that cost...
Q. 5 (Total Marks: 10) Supreme Ltd. began with an inventory of 60 signs that cost a total of $1,800 Supreme purchased & sold signs on credit as follows: Purchase 1 65 signs @ $32 Sale 1 105 signs @ $65 Purchase 2 92 signs @ $38 Sale 2 75 signs @ $68 Supreme uses the average cost method of inventory valuation. Cash payments on account totalled $2,080. Operating expenses were $3,600. Supreme paid two-thirds in cash & accrued the...
A company that uses a FIFO inventory system and began operations in Year 1 has the...
A company that uses a FIFO inventory system and began operations in Year 1 has the following information. Year 1 Year 2 Sales units 8,000 10,000 Selling price $45 $46 Production units 12,000 8,000 Unit direct material cost $2.00 $2.00 Unit direct labor cost $1.00 $1.00 Unit commission cost $.50 $.50 Annual Fixed Overhead $180,000 $180,000 Annual Fixed S,G,&A $140,000 $150,000 1. What are the inventoriable cost per unit in years 1 and 2? Absorption Costing Variable Costing 2. What...
Blue Furniture Ltd. uses a perpetual inventory system and has a beginning inventory, as at June...
Blue Furniture Ltd. uses a perpetual inventory system and has a beginning inventory, as at June 1, of 490 bookcases at a cost of $130 each. During June, the company had the following purchases and sales of bookcases: Purchases Sales Date Units Unit cost Units Unit price June 6 1,200 $132 10 1,030 $204 14 1,770 133 16 1,670 209 26 960 134 (a) Determine the cost of goods sold and the cost of the ending inventory using the average...
Bramble Furniture Ltd. uses a perpetual inventory system and has a beginning inventory, as at June...
Bramble Furniture Ltd. uses a perpetual inventory system and has a beginning inventory, as at June 1, of 520 bookcases at a cost of $125 each. During June, the company had the following purchases and sales of bookcases: Purchases Sales Date Units Unit cost Units Unit price June 6 1,170 $127 10 950 $216 14 1,750 128 16 1,600 221 26 1,040 129 (a) Correct answer iconYour answer is correct. Determine the cost of goods sold and the cost of...
Goddard Company has used the FIFO method of inventory valuation since it began operations in 2015....
Goddard Company has used the FIFO method of inventory valuation since it began operations in 2015. Goddard decided to change to the average cost method for determining inventory costs at the beginning of 2018. The following schedule shows year-end inventory balances under the FIFO and average cost methods: Year FIFO Average Cost 2015 $ 47,000 $ 58,000 2016 84,000 73,000 2017 91,000 84,000 Required: 1. Ignoring income taxes, prepare the 2018 journal entry to adjust the accounts to reflect the...
Goddard Company has used the FIFO method of inventory valuation since it began operations in 2015....
Goddard Company has used the FIFO method of inventory valuation since it began operations in 2015. Goddard decided to change to the average cost method for determining inventory costs at the beginning of 2018. The following schedule shows year-end inventory balances under the FIFO and average cost methods: Year FIFO Average Cost 2015 $ 46,300 $ 56,600 2016 81,900 72,300 2017 88,200 81,900 Required: 1. Ignoring income taxes, prepare the 2018 journal entry to adjust the accounts to reflect the...
The Kay company currently uses FIFO for inventory valuation. Their records for year ended June 30,2007...
The Kay company currently uses FIFO for inventory valuation. Their records for year ended June 30,2007 reflected: July 1, 2006 inv 100,000 units at $7.50 Purchases during the year 400,000 units at 8.00 Sales during the year 350,000 units at $15 Expenses exclusive of income tax 1,290,000 cash balance on June 30,2006 250,000 income tax rate: 45% The use of the LIFO method will result in an approximate tax expense for fiscal 2007 of:
Maxell Company uses the FIFO method to assign costs to inventory and cost of goods sold....
Maxell Company uses the FIFO method to assign costs to inventory and cost of goods sold. The company uses a periodic inventory system. Consider the following information: Date Description # of units Cost per unit January 1 Beginning inventory 160 $ 6 June 2 Purchase 90 $ 5 November 5 Sales 170 What amounts would be reported as the cost of goods sold and ending inventory balances for the year? Multiple Choice a. Cost of goods sold $1,070; Ending inventory...
Maxell Company uses the FIFO method to assign costs to inventory and cost of goods sold....
Maxell Company uses the FIFO method to assign costs to inventory and cost of goods sold. The company uses a periodic inventory system. Consider the following information: Date Description # of units Cost per unit January 1 Beginning inventory 280 $ 6 June 2 Purchase 75 $ 5 November 5 Sales 305 What amounts would be reported as the cost of goods sold and ending inventory balances for the year?
Danville Bottlers is a wholesale beverage company. Danville uses the FIFO inventory method to determine the...
Danville Bottlers is a wholesale beverage company. Danville uses the FIFO inventory method to determine the cost of its ending inventory. Ending inventory quantities are determined by a physical count. For the accounting year-end December 31, 2021, ending inventory was originally determined to be $3,265,000. However, on January 17, 2022, John Howard, the company’s controller, discovered an error in the ending inventory count. He determined that the correct ending inventory amount should be $2,600,000. Danville is a privately owned corporation...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT