Question

Sheffield Inc. has provided you with the following information. This company purchases its inventory from a supplier for cash and has only cash sales. Sheffield uses the average cost formula in a perpetual inventory system. Increased competition has recently reduced the price of the product.

Date			Explanation		Units			Unit Cost			Unit Price
Apr.	1		Beginning inventory		50			$78
	6		Purchases		110			89
	8		Sales		(130	)					$120
	15		Purchases		120			68
	20		Sales		(120	)					102
	27		Purchases		20			59

Based on your answer to part (c), determine whether the company should record a journal entry at the end of April and, if so, prepare the entry. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 1.25. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
answer to part C was $2450 (49 x 50)

Account Titles and Explanation	Debit	Credit
COGS	?
inventory		?

Answer 1

Account Titles and Explanation	Debit	Credit
Cost of Goods Sold	$875.30
Inventory		$875.30
($3,325.30 - $2,450)
Working
Average Cost - Perpetual
	Purchases		Cost of Goods Sold			Inventory Balance
Perpetual Average	# of units	Cost per unit	# of units sold	Cost per unit	Cost of goods sold	# of units	Cost per unit	Inventory Value
April 1						50	$78.00	$3,900.00
Purchase - April 6	110	$89.00				50	$78.00	$3,900.00
						110	$89.00	$9,790.00
Average cost						160	$85.56	$13,690.00
Sales - April 8			130	$85.56	$11,123	30	$85.56	$2,566.80
Purchase - April 15	120	$68.00				30	$85.56	$2,566.80
						120	$68.00	$8,160.00
Average cost						150	$71.51	$10,726.80
Sale - April 20			120	$71.51	$8,581	30	$71.51	$2,145.30
Purchase - April 27	20	$59.00				30	$71.51	$2,145.30
						20	$59.00	$1,180.00
Average cost			250		$19,704	50		$3,325.30