You are given the following information for Churchill Company for the month ended November 30, 2024:

Churchill Company uses a perpetual inventory system. All sales and purchases are on account.

Instructions
a. Calculate the cost of goods sold and the ending inventory using FIFO.
b. Assume the sales price was $60 per unit for the sale on November 29. Prepare journal entries to
record the November 22 purchase and the November 29 sale.
c. Calculate gross profit for November. Assume the sales price was $66 per unit for the goods sold on November 15.
d. Assume that at the end of November the company counted its inventory. There were 73 units on hand. What journal entry, if any, should the company make to record the shortage?
e. If the company had not discovered this shortage, what would be overstated or understated on the balance sheet and income statement and by what amount?

Taking It Further

In what respects does FIFO provide more useful information than weighted average?

Transcribed Image Text:

Date Nov. 1 9 15 22 29 30 Description Beginning inventory Purchase Sale Purchase Sale Purchase Units 60 100 (120) 150 (160) 45 Unit Cost $50 46 44 42