Question

Exercise 8-09 Crane Company sells one product. Presented below is information for January for Crane Company. Jan. 1 Inventory 101 units at $4 each 4 Sale 80 units at $8 each 11 Purchase 144 units at $6 each 13 Sale 111 units at $9 each 20 Purchase 156 units at $7 each 27 Sale 100 units at $11 each Crane uses the FIFO cost flow assumption. All purchases and sales are on account.

Assume Crane uses a periodic system. 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 January is 110 units. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

enter an account title for the journal entry on January 31

Inventory

cogs

purchases

Inventory

Compute gross profit using the periodic system. =

Assume Crane uses a perpetual system. Prepare all necessary journal entries. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Jan 13?

Jan 27?

Compute gross profit using the perpetual system.=

Answer 1

Ans.

Assume Crane uses a periodic system. 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 January is 110 units

Date	Account Titles and Explanation	Debit	Credit
Jan. 4	Accounts receivable (80 units*$8)	$   640.00
	Sales revenue		$   640.00
	(To record the credit sales)
Jan. 11	Purchases (144 units*$6)	$   864.00
	Accounts Payable		$   864.00
	(To record the credit purchases)
Jan. 13	Accounts receivable (111 units*$9)	$   999.00
	Sales revenue		$   999.00
	(To record the credit sales)
Jan. 20	Purchases (156 units*$7)	$1,092.00
	Accounts Payable		$1,092.00
	(To record the credit purchases)
Jan. 27	Accounts receivable (100 units*$11)	$1,100.00
	Sales revenue		$1,100.00
	(To record the credit sales)
Jan. 31	Inventory (Ending Inventory) (110 units*$7)	$   770.00
	Cost of goods sold (bal fig)	$1,590.00
	Purchases (864+1092)		$1,956.00
	Inventory (beginning Inventory) (101*$4)		$   404.00
	(To record the cost of goods sold)

Compute gross profit using the periodic system.

Gross Profit = Sales revenue - Cost of goods sold

Gross Profit = $ 640 + $ 999 + $ 1,100 - $ 1,590 = $ 1,149

Assume Crane uses a perpetual system. Prepare all necessary journal entries.

Date	Account Titles and Explanation	Debit	Credit
Jan. 4	Accounts receivable (80 units*$8)	$   640.00
	Sales revenue		$   640.00
	(To record the sales)
	Cost of goods sold (80 units*$4)	$   320.00
	Inventory		$   320.00
	(To record the cost of inventory)
Jan. 11	Inventory (144 units*$6)	$   864.00
	Accounts Payable		$   864.00
	(To record the credit purchases)
Jan. 13	Accounts receivable (111 units*$9)	$   999.00
	Sales revenue		$   999.00
	(To record the credit sales)
	Cost of goods sold [(21 units*$4)+( 90units*$6)]	$   624.00
	Inventory		$   624.00
	(To record the cost of inventory)
Jan. 20	Inventory (156 units*$ 7)	$1,092.00
	Accounts Payable		$1,092.00
	(To record the credit purchases)
Jan. 27	Accounts receivable (100 units*$11)	$1,100.00
	Sales revenue		$1,100.00
	(To record the credit sales)
	Cost of goods sold (54 units*$ 6 + 46 units * $7)	$   646.00
	Inventory		$   646.00
	(To record the cost of inventory)

Compute gross profit using the perpetual system.

Gross Profit = Sales revenue - Cost of goods sold

Gross Profit = $ 640 + $ 999 + $ 1,100 - $ 320 - $ 624 - $ 646 = $ 1,149