Question

Jose Zorilla uses a perpetual inventory system. During April, he sold 700 units, (270 units on April 20 and 430 units on April 28). The following other information is available: Units Unit Cost Total Cost April 1 inventory 250 $12.20 $3,050.00 April 15 purchase 400 17.20 6,880.00 April 23 purchase 350 15.30 5,355.00 1,000 $15,285.00

Calculate the April 30 inventory and the April cost of goods sold using the weighted average cost formula. (Round the weighted average cost per unit to 3 decimal places, e.g. 5.275 and final answers to 2 decimal places, e.g. 5,275.25.) April 30 inventory $ April cost of goods sold $

Calculate the April 30 inventory and the April cost of goods sold using the FIFO cost formula. April 30 inventory $ April cost of goods sold $

Prepare the journal entry to record the April 15 purchase assuming the company uses the FIFO method of inventory. All purchases are on credit. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Apr. 15

Prepare the journal entries to record the sale of units on April 28 for a total of $10,208, assuming the company uses the weighted average cost method. All sales are credit sales. (Round final answers to 2 decimal places, e.g. 5,275.25. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Apr. 28 (To record credit sale) Apr. 28 (To record cost of goods)

Answer 1

(a) Computation of Jos Zorilla's Cost of Goods sold & cost of ending inventory as at April using the weighted average method:

Under weighted average method,

Cost of Goods sold = Weighted average cost of purchase*No of units sold

Cost of ending inventory = Weighted average cost of purchase*Ending inventory units

Ending inventory units = Opening Inventory + Total purchase units - Sale units

Therefore, Ending inventory units = 250 + (400 + 350) - 700 = 300 units

Weighted average cost of purchase = (Cost of opening goods + Total cost of goods purchased)/(Opening Inventory + Total purchase units)

Cost of opening goods = $3,050

Cost of Purchases = $6,880+$5,355 = $12,235

Therefore, Weighted average per unit of purchase = ($3,050+$12,235)/ (250+400+350)

Therefore, Weighted average per unit of purchase = $15,285/240 units = $15.285 per unit

Cost of Goods sold of Jos Zorilla using weighted average method = 700 units*$15.285 = $10,699.50

Cost of the Jos Zorilla ending inventory as at April using weighted average method = 300 units*$15.285 = $4,585.50

(b) Computation of Jos Zorilla's Cost of Goods sold & cost of ending inventory as at April using FIFO:

Under the FIFO method, the earliest goods purchased are the first ones removed from the inventory account.

Hence, the ending inventory of 300 units will be from purchase on April 23.

Cost of goods sold under FIFO = Cost of opening Inventory + Cost of 300 units Inventory purchased on April 15 + Cost of 50 units Inventory purchased on April 23

Cost of goods sold of Dice Compan sold under FIFO = $3,050 + $6,880 + (50 units * $15.30) = $10,695

Cost of the Jos Zorilla ending inventory as at April using FIFO = 300 units * 15.30 = $4,590

(c) Journal entry to record the April 15 purchase assuming the company uses the FIFO method of inventory will be as follows:

(d)  Journal entries to record the sale of units on April 28 for a total of $10,208, assuming the company uses the weighted average cost method will be as follows: