Question

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Problem 6-6B Record transactions using a perpetual system, prepare a partial income statement, and adjust for the lower of cost and net realizable value(LO6-2, 6-3, 6-4, 6-5, 6-6)

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At the beginning of November, Yoshi Inc.’s inventory consists of 64 units with a cost per unit of $96. The following transactions occur during the month of November.

November		2		Purchase 80 units of inventory on account from Toad Inc. for $100 per unit, terms 1/10, n/30.
November		3		Pay cash for freight charges related to the November 2 purchase, $320.
November		9		Return 16 defective units from the November 2 purchase and receive credit.
November		11		Pay Toad Inc. in full.
November		16		Sell 100 units of inventory to customers on account, $12,600. [Hint: The cost of units sold from the November 2 purchase includes $100 unit cost plus $5 per unit for freight less $1 per unit for the purchase discount, or $104 per unit.]
November		20		Receive full payment from customers related to the sale on November 16.
November		21		Purchase 56 units of inventory from Toad Inc. for $106 per unit, terms 3/10, n/30.
November		24		Sell 70 units of inventory to customers for cash, $7,700. (Note: For calculating the cost of inventory sold, ignore the possible purchase discount on November 20.)

2. Suppose by the end of November that the remaining inventory is estimated to have a net realizable value per unit of $82, record any necessary adjustment for the lower of cost and net realizable value. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

November 30 Costs of Goods Sold ???

   Inventory ???

Answer 1

Journal entries
Date	General Journal	Debit	credit
November 2	Merchandise inventory	8,000
	Accounts payable		8,000
	(To record purchased of inventory on account) (80*100)
November 3	Merchandise inventory	320
	Cash		320
	(To record fright paid for inventory purchase)
November 9	Accounts payable	1,600
	Merchandise inventory		1,600
	(To record goods returned to suppliers) (16*100)
November 11	Accounts payable	6,400
	Merchandise inventory (6400*1%)		64
	Cash		6,336
	(To record cash paid to supplier.) (net purchase on account = 8000-1600)
November 16	Accounts receivable	12,600
	Sales revenue		12,600
	(To record sales revenue on account.)
November 16	Cost of goods sold	9,888
	Merchandise inventory		9,888
	(To record cost of goods sold using FIFO method.) ((64*96)+(remaining 36*104) [Units on hand = (80-16)-36=28]
November 20	Cash	12,600
	Accounts receivable		12,600
	(To record cash received from customer.)
November 21	Merchandise inventory	5,936
	Accounts payable		5,936
	(To record purchased of inventory on account) (56*106)
November 24	Cash	7,700
	Sales revenue		7,700
	(To record sales revenue on cash.)
November 24	Cost of goods sold	7,364
	Merchandise inventory		7,364
	(To record cost of goods sold using FIFO method.) ((28*104)+ (42*106)) [Units on hand = 28+56-70=14]

Part 2

Date	General Journal	Debit	credit
Nov 30	Cost of goods sold	336
	Merchandise inventory		336
	(To record write off inventory.) (14 units *(106-82))