Question

Wildhorse Company sells one product. Presented below is information for January for Wildhorse Company. Nov. 1 Inventory 340 units at $9 each 5 Purchase 180 units at $10 each 10 Sale 420 units at $18 each 15 Purchase 420 units at $9.50 each 21 Sale 470 units at $19 each 30 Purchase 330 units at $9.80 each Wildhorse uses the FIFO cost flow assumption. All purchases and sales are on account. Assume Wildhorse uses a periodic system.

a)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 November is 380 units. Assume Wildhorse uses a periodic system.

b)Assume Wildhorse uses a perpetual system. Prepare all necessary journal entries.

Answer 1

	In FIFO,It is assumed that goods purchased first are sold first
a)	Periodic system:
	Date	Accoun titles and explanation				Debit	Credit
	Nov 5.	Purchases			(180*10)	1800
		Accounts payable					1800
		(To record purchase)
	Nov 10.	Accounts receivable			(420*18)	7560
		Sales					7560
		(To record sales)
	Nov 15.	Purchases			(420*9.50)	3990
		Accounts payable					3990
		(To record purchase)
	Nov 21.	Accounts receivable			(470*19)	8930
		Sales					8930
		(To record sales)
	Nov 30.	Purchases			(330*9.80)	3234
		Accounts payable					3234
		(To record purchase)
	Nov 30.	Cost of goods sold			(Note:1)	8375
		Inventory			(Plug)	649
		Purchases		(1800+3990+3234)			9024
		(To record cost of goods sold)
	Note:1
	In FIFO,It is assumed that goods purchased first are sold first
	Total units sold:
		Units
	Nov 10.	420
	Nov 21.	470
	Total	890
	Cost of goods sold:
	890 units sold as follows
					$
	From	Nov 1.	340 units at $9 each		3060
	From	Nov 5.	180 units at $10 each		1800
	From	Nov 15.	370 units at $9.50 each		3515
	Total				8375
b)	Perpetual system:
	Date	Accoun titles and explanation				Debit	Credit
	Nov 5.	Inventory			(180*10)	1800
		Accounts payable					1800
		(To record purchase)
	Nov 10.	Accounts receivable			(420*18)	7560
		Sales					7560
		(To record sales)
		Cost of goods sold			(Note:2)	3860
		Inventory					3860
		(To record cost of goods sold)
	Nov 15.	Inventory			(420*9.50)	3990
		Accounts payable					3990
		(To record purchase)