Question

Sigfusson Supplies reported beginning inventory of 115 units, for a total cost of $4,025. The company had the following transactions during the month:

Jan.	6	Sold 45 shovels on account at a selling price of $45 per unit.
	9	Bought 35 shovels on account at a selling price of $35 per unit.
	11	Sold 35 shovels on account at a cost of $50 per unit.
	19	Sold 45 shovels on account at a selling price of $55 per unit.
	27	Bought 35 shovels on account at a cost of $35 per unit.
	31	Counted inventory and determined that 25 units were on hand.
		Prepare the journal entries that would be recorded using periodic inventory system based on the above information.
		Prepare the journal entries that would be recorded using a perpetual inventory system, including any “book-to-physical” adjustment that might be needed. Jan O6 Record the sales revenue on account Jan 06 Record the Cost of Goods sold Jan 09 Record the Purchase of inventory on account Jan 11 Record the sales revenue on account Jan 11 Record the cost of goods sold Jan 19 Record the sales on account Jan 19 Record the cost of goods sold Jan 27 Record the purchase of inventory on account Jan 31 Record the book to physical adjustment What is the dollar amount of shrinkage that you were able to determine in periodic inventory system? a. One cannot determine b. $1225 3-b. What is the dollar amount of shrinkage that you were able to determine in perpetual inventory system

Answer 1

Req 1
Journal entry under periodic Inventory
Date	Accounts title and explanations				Debit $	Credit $
6-Jan	Accounts receivable Dr.				2025
	Sales revenue					2025
9-Jan	Purchases Dr.				1225
	Accounts payable					1225
11-Jan	Accounts receivable Dr.				1750
	Sales revenue					1750
19-Jan	Accounts receivable Dr.				2475
	Sales revenue					2475
27-Jan	Purchases Dr.				1225
	Accounts payable					1225
31-Jan	Inventory Account Dr.				2450
	Purchases					2450
31-Jan	Cost of Goods sold Dr.				5600
	Inventory					5600
Note: Cost of goods sold:
Beginning inventory			4025
Add: Purchases			2450
Less: Ending (25 units @35)			875
Cost of goods sold			5600
Req 2:
Journal entries under Perpetual Inventory
Date	Accounts title and explanations				Debit $	Credit $
6-Jan	Accounts receivable Dr.				2025
	Sales revenue					2025
6-Jan	Cost of goods sold				1575
	Inventory					1575
9-Jan	Inventory Dr.				1225
	Accounts payable					1225
11-Jan	Accounts receivable Dr.				1750
	Sales revenue					1750
11-Jan	Cost of goods sold Dr.				1225
	Inventory					1225
19-Jan	Accounts receivable Dr.				2475
	Sales revenue					2475
19-Jan	Cost of goods sold Dr.				1575
	Inventory					1575
27-Jan	Invevntory Dr.				1225
	Accounts payable					1225
31-Jan	Cost of goods sold Dr.				1225
	Inventory					1225
	(for inventory Shrinkage)
Note: Number of units of shrinkage:
Units to be in hands			60
Less: Units actually in hand			25
Units shrinkage			35
Cost per unit			35
Inventory Shrinkage			1225
Req 3-a: Under Periodic Inventory, Inventory Shrinkage
Answer is a. One cannot determine
Req3-b: Under Perpetual, Inventory Shrinkage
Answer is B. $ 1225