Question

In: Accounting

On May 10, Hudson Computing sold 140 Millennium laptop computers to Apex Publishers. At the date...

On May 10, Hudson Computing sold 140 Millennium laptop computers to Apex Publishers. At the date of this sale, Hudson’s perpetual inventory records included the following cost layers for the Millennium laptops. Purchase Date Quantity Unit Cost Total Cost Apr. 9 105 $ 1,500 $ 157,500 May 1 45 $ 1,600 72,000 Total on hand 150 $ 229,500

Prepare journal entries to record the cost of the 140 Millennium laptops sold on May 10, assuming that Hudson Computing uses the following.

a. Specific identification method (97 of the units sold were purchased on April 9, and the remaining units were purchased on May 1).

b. Average-cost method.

c. FIFO method.

d. LIFO method.

Solutions

Expert Solution

a) Specific identification method

Cost of goods sold = (97 x 1500) + (43x 1600) = 214,300

Journal Entry

Date

Accounts Title & Explanation

Debit

Credit

May 10

Cost of Goods Sold

$214,300

     Merchandise Inventory

$214,300

(For recording cost of goods sold)

b) Average cost method

Cost of goods sold = 140 x (229,500/150) = 214,200

Journal Entry -

Date

Accounts Title & Explanation

Debit

Credit

May 10

Cost of Goods Sold

$214,200

     Merchandise Inventory

$214,200

(For recording cost of goods sold)

C) FIFO Method;

Date

Accounts Title & Explanation

Debit

Credit

May 10

Cost of Goods Sold

$212,000

     Merchandise Inventory

$212,000

(For recording cost of goods sold)

Working Note;

Cost of goods sold under FIFO, is calculated as follow;

(105 * $1500) + (35 * $1600)

= $157,500 + $56,000

= $213,500

d)LIFO Method

Date

Accounts Title & Explanation

Debit

Credit

May 10

Cost of Goods Sold

$214,500

     Merchandise Inventory

$214,500

(For recording cost of goods sold)

Working Note;

Cost of goods sold under LIFO, is calculated as follow;

(45 * $1600) + (95 * $1500)

= $72000 + $142500

= $214,500


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