Question

Whispering Company sells one product. Presented below is information for January for Whispering Company.

Jan. 1		Inventory		111	units at $5 each
4		Sale		90	units at $8 each
11		Purchase		159	units at $6 each
13		Sale		130	units at $9 each
20		Purchase		149	units at $7 each
27		Sale		85	units at $11 each

Whispering uses the FIFO cost flow assumption. All purchases and sales are on account.

Assume Whispering 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 the amount is entered. Do not indent manually.)

Compute gross profit using the perpetual system.

Answer 1

DATE	Accounts Name	Debit	Credit	Remarks
Jan.4	Accounts Receivable	720
	Sales Revenue		720
	(To record credit sale)
Jan.4	Cost of Goods Sold	450		(90*5)
	Inventory		450	(90*5)
	(To record cost of goods sold)
Jan.11	Inventory	954
	Accounts Payable		954
	(To record purchase)
Jan.13	Accounts Receivable	1170
	Sales Revenue		1170
	(To record credit sale)
Jan.13	Cost of Goods Sold	759		(21*5 + 109*6)
	Inventory		759	(21*5 + 109*6)
	(To record cost of goods sold)
Jan.20	Inventory	1043
	Accounts Payable		1043
	(To record purchase)
Jan.27	Accounts Receivable	935
	Sales Revenue		935
	(To record credit sale)
Jan.27	Cost of Goods Sold	545		(50*6+35*7)
	Inventory		545	(50*6+35*7)
	(To record cost of goods sold)
Calculation of Gross Profit
	Sales Revenue	2825	(720+1170+935)
	Less: Cost of Goods Sold	1754	(450+759+545)
	Gross Profit	1071