Question

The beginning inventory at Midnight Supplies and data on purchases and sales for a three month period ending March 31 are as follows:

Date		Transaction	Number of Units	Per Unit	Total
Jan.	1	Inventory	2,600	$58.00	$150,800
	10	Purchase	7,200	66.00	475,200
	28	Sale	3,950	116.00	458,200
	30	Sale	1,300	116.00	150,800
Feb.	5	Sale	500	116.00	58,000
	10	Purchase	17,500	68.00	1,190,000
	16	Sale	9,200	121.00	1,113,200
	28	Sale	8,000	121.00	968,000
Mar.	5	Purchase	14,400	69.60	1,002,240
	14	Sale	10,100	121.00	1,222,100
	25	Purchase	3,300	70.00	231,000
	30	Sale	7,900	121.00	955,900

	Instructions
1.	Record the inventory, purchases, and cost of goods sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3 , using the first-in, first-out method.
2.	Determine the total sales and the total cost of goods sold for the period. Journalize the entries in the sales and cost of goods sold accounts. Assume that all sales were on account and date your journal entry March 31. Refer to the Chart of Accounts for exact wording of account titles.
3.	Determine the gross profit from sales for the period.
4.	Determine the ending inventory cost as of March 31.
5.	Based upon the preceding data, would you expect the ending inventory using the last-in, first-out method to be higher or lower?

CHART OF ACCOUNTS
Midnight Supplies
General Ledger
ASSETS 110 Cash 111 Petty Cash 120 Accounts Receivable 131 Notes Receivable 132 Interest Receivable 141 Inventory 145 Office Supplies 146 Store Supplies 151 Prepaid Insurance 181 Land 191 Office Equipment 192 Accumulated Depreciation-Office Equipment 193 Store Equipment 194 Accumulated Depreciation-Store Equipment LIABILITIES 210 Accounts Payable 221 Notes Payable 222 Interest Payable 231 Salaries Payable 241 Sales Tax Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends	REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Goods Sold 515 Credit Card Expense 516 Cash Short and Over 520 Salaries Expense 531 Advertising Expense 532 Delivery Expense 533 Insurance Expense 534 Office Supplies Expense 535 Rent Expense 536 Repairs Expense 537 Selling Expenses 538 Store Supplies Expense 561 Depreciation Expense-Office Equipment 562 Depreciation Expense-Store Equipment 590 Miscellaneous Expense 710 Interest Expense

1. Record the inventory, purchases, and cost of goods sold data in a perpetual inventory record similar to the one illustrated in

Exhibit 3

, using the first-in, first-out method. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Goods Sold Unit Cost column and in the Inventory Unit Cost column.

Date	Purchases			Cost of Goods Sold			Inventory
Date	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
Jan. 1
10
10
28
28
30
Feb. 5
10
10
16
16
28
Mar. 5
5
14
14
25
25
30
30
31	Balances

2. Determine the total sales and the total cost of goods sold for the period. Journalize the entries in the sales and cost of goods sold accounts. Assume that all sales were on account and date your journal entry March 31. Refer to the Chart of Accounts for exact wording of account titles.

Question not attempted.

PAGE 10

JOURNAL

ACCOUNTING EQUATION

Score: 0/51

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4

3. Determine the gross profit from sales for the period.

Answer 1

	purchases	cost of goods sold	inventory
	quantity	unit cost $	total cost $	quantity	unit cost $	total cost $	quantity	unit cost $	total cost $
Jan, 1	2600	58	150800				2600	58	150800
Jan, 10	7200	66	475200				2600	58	150800
							7200	66	475200
Jan, 28				2600	58	150800
				1350	66	89100	5850	66	386100
Jan, 30				1300	66	85800	4550	66	300300
Feb, 5				500	66	33000	4050	66	267300
Feb, 10	17500	68	1190000				4050	66	267300
							17500	68	1190000
Feb, 16				4050	66	267300
				5150	68	350200	12350	68	839800
Feb, 28				8000	68	544000	4350	68	295800
Mar, 5	14400	69.6	1002240				4350	68	295800
							14400	69.6	1002240
Mar, 14				4350	68	295800
				5750	69.6	400200	8650	69.6	602040
Mar, 25	3300	70	231000				8650	69.6	602040
							3300	70	231000
Mar, 30				7900	69.6	549840	750	69.6	52200
							3300	70	231000
total	45000		3049240	40950		2766040	4050		283200

calculation of sales	$
Jan, 28	458200
Jan, 30	150800
Feb, 5	58000
Feb, 16	1113200
Feb, 28	968000
Mar, 14	1222100
Mar, 30	955900
total sales	4926200

total cost of sales = $2,766,040 (refer to the first working)

calculation of gross profit	$
total sales	4926200
Less total cost of sales	2766040
gross profit	2160160

value of ending inventory 4050 = $283,200 (refer to the firs working)