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		16.20			6,480.00
April 23 purchase		350		14.00			4,900.00
		1,000					$14,430.00

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. (Round answers to 0 decimal places, e.g. 5,275.)

April 30 inventory		$
April cost of goods sold		$

Prepare the journal entry to record the April 15 purchase assuming the company uses 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, assuming the company uses the weighted average cost method. All sales are credit sales, and total $10,208. (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

Working Notes

1. FIFO

	FIFO
	Receipts	Issue	Closing Balance
Date	Units	Price per ut	Total	Units	Price per ut	Total	Units	Price per ut	Total
01-Apr	250	12.2	3050	0	0	0	250	12.2	3050
15-Apr	400	16.2	6480	0	0	0	250	12.2	3050
							400	16.2	6480
20-Apr				250	12.2	3050
				20	16.2	324	380	16.2	6156
23-Apr	350	14	4900	0	0	0	380	16.2	6156
							350	14	4900
28-Apr				380	16.2	6156
				50	14	700	300	14	4200

Closing inventory =$4,200(300 units at $14 p.u)

Cost of goods sold =

Dates	Units	Price per ut ($)	Total ($)
20-Apr	250	12.2	3050
	20	16.2	324
	380	16.2	6156
28-Apr	50	14	700
	Total		10230

Journal Under FIFO

Date	Particulars	Debit	Credit
15th April	Inventory A/c	6480
To Accounts payable a/c		6480

Weighted Average method

	Weighted Average method
	Receipts	Issue	Closing Balance
Date	Units	Price per ut	Total	Units	Price per ut	Total	Units	Price per ut	Total
01-Apr	250	12.2	3050	0	0	0	250	12.2	3050
15-Apr	400	16.2	6480				650	14.66	9529
20-Apr				270	14.66	3958.2	380	14.66	5570.8
23-Apr	350	14	4900				750	14.34	10755
28-Apr				430	14.34	6166.2	320	14.34	4588.8

Weighted Average Method :

Cost of goods sold = No.of units sold *Weighted average price per ut

Weighted average price unit = Total cost of goods available for sale/Total no. of units available for sale.

Eg for the 15th April  computation of average price per unit = (3050+6480)/(250+400) = 14.66

Therefore Closing stock is valued at $4,588.80(320units at $14.34p.u)

And cost of goods sold = On 20th April = $3958.20(270 units at $14.66p.u)

28th April = $6,166.20(430 units at 14.34p.u)

Total =$10,124.4

Journal Entry:

Date	Particulars	Debit	Credit
28th April	Accounts receivable A/c	6166.2
To Sales A/c		6166.2