Question

Johnson Inc. is a wholesale company selling special parts for the automotive industry. The company uses weighted-average and a perpetual inventory system. Its inventory records for part SA-123 show the following transactions for the month of May 2020:

Date	Transaction	Units Purchased	Unit Cost	Units Sold	Unit Selling Price
May 1	Balance	120	$7.00
May 10	Purchase	500	$7.20
May 15	Sale			(100)	$12.40
May 21	Sale			(150)	$12.50
May 23	Purchase	250	$7.30

Required:

1. Assuming Johnson Inc. makes all sales and purchases of inventory on account, prepare the journal entries for each of the above listed transactions.

Answer 1

Solution:

Date	Particulars	Debit	Credit
10-May	Purchase of inventory A/c	3,600
	To Creditor A/c		3,600
	(Being goods purchased on credit)
15-May	Debtor A/c	716
	To Sale of inventory A/c		716
	(Being goods sold)
21-May	Debtor A/c	1,074
	To Sale of inventory A/c		1,074
	(Being goods sold)
23-May	Purchase of inventory A/c	1,825
	To Creditor A/c		1,825
	(Being goods purchased on credit)

WN 1:	Calculation of weighted average price
	120*7 + 500*7.2	=	7.16
	620