Question

A company has beginning inventory of 2 units at 10/each. In order: A purchase of 3 units at $13.00/each and then purchased 10 units at $15.00 each. The company sold 11 units at $25.00/each (on credit). Book all entries assuming FIFO. The terms were 2/10, N30. The customer paid within 5 days.

Answer 1

Journal Entries
Transaction	Account Title and explanation	Debit	Credit
1	Merchandise inventory	$39
	Cash		$39
	(3 Units purchased at rate of $ 13)
1	Merchandise inventory	$150
	Cash		$150
	(10 Units purchased at rate of $ 15)
3	Account Receivable (11 Units X $ 25)	$275
	Sales Revenue		$275
	(Reord the sales Revenue
4	Cost of Goods Sold	$149
	Merchandise Inventory		$149
	(Record the Cost of Good Sold)
4	Cash ($ 275 X 98%)	$269.50
	Discount on Sales ($ 275 X 2%)	$5.50
	Account Receivable		$275.00
	(Cash collected and discount paid for timely payment)
WORKING NOTES:
	CALCULATIONO OF COST OF GOODS SOLD AT FIFO METHOD
	Beginning inventory (2 units @ $ 10)	$20.00
	Purhcase of 3 Units @ $ 13	$39.00
	Balance 6 Untis Purchase at $ 15	$90.00
	Cost of Goods Sold as per FIFO	$149.00