Question

At the beginning of the year, Grouper Ltd. had 910 units with a cost of $5 per unit in its beginning inventory. The following inventory transactions occurred during the month of January:

Jan.	3		Sold 730 units on account for $10 each.
	9		Purchased 970 units on account for $6 per unit.
	15		Sold 840 units for cash at $9 each.

Prepare journal entries for these January transactions assuming that Grouper Ltd. uses FIFO under a periodic inventory system. Grouper updates records at month end.

Date	Account Titles and Explanation	Debit	Credit
Jan. 3
9
15
31

Answer 1

STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC FIFO METHOD
	RECIEPTS	COST OF GOODS SOLD	BALANCE
DATE	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $
Balance	910	5	4550	910	5	4550
09 Jan Purch.	970	6	5820	660	6	3960	310	6	1860
TOTAL	1880		10370	1570		8510	310		1860
Journal entries
S.no.	Accounts title and explanations		Debit $	Credit $
03-Jan	Accounts receivable			7300
	Sales revenue (730*10)			7300
	(for sales made on account)
09-Jan	Purchases (970*6)			5820
	Accounts payable				5820
	(for purchases made on account)
15-Jan	Cash				7560
	Sales revenue (840*9)			7560
	(for sales made for cash)
31-Jan	Inventory (Ending)			1860
	Cost of goods sold (balancing figure)	8510
	Purchases				5820
	Inventory (beginning)			4550
	(for recording the cost of goods sold)