AP7-4 Recording Inventory Transactions, Computing Ending Inventory and Cost of Sales, and Determining the Effects of...

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AP7-4 Recording Inventory Transactions, Computing Ending Inventory and Cost of Sales, and Determining the Effects of LCANRY Rule on the Inventory Termomer Ratio (P7-8) L07-1,7-2,74,75 Chair Inc. specializes in importing furniture for commercial use. Chaiz reported the following information (all transactions are on account) for the quarter ended September 30, 20211 Date Transaction Units Amount per Unit July 1 Inventory 224 $36.00 July 13 Purchase 152 35.50 July 29 Sale 242 49.50 August 3 Purchase 112 34.50 August 16 Purchase 204 32.50 September 21 Sale 134 49.00 Chair uses the perpetual inventory system and the FIFO method for inventory costing. Required: 1. Prepare journal entries to record the transactions on July 13 and July 29. Assume that all sales and purchase transactions are on account. 2. Compute the cost of ending inventory at September 30, 2021, and the cost of sales, gross profit, and gross profit percentage for the quarter ended September 30, 2021. 3. Would Chair's gross profit increase or decrease if it uses the weighted average cost method instead of FIFO? Explain without re-computing the gross prof 4. Chair is required to report its ending inventory at the lower of cost and net realizable value. The net realizable value of the chairs decreased to $33 per unit on September 30, 2021. Prepare the adjusting entry to reflect the application of the LC&NRV rule. 5. Assume that Chair's accountant did not apply the LC&NRV rule, and that the company inventory turnover for the quarter ended September 30, 2021 is 1.45. Recompute the inventory turnover using the correct value for ending inventory. AP7-4 Recording Inventory Transactions, Computing Ending Inventory and Cost of Sales, and Determining the Effects of LCANRY Rule on the Inventory Termomer Ratio (P7-8) L07-1,7-2,74,75 Chair Inc. specializes in importing furniture for commercial use. Chaiz reported the following information (all transactions are on account) for the quarter ended September 30, 20211 Date Transaction Units Amount per Unit July 1 Inventory 224 $36.00 July 13 Purchase 152 35.50 July 29 Sale 242 49.50 August 3 Purchase 112 34.50 August 16 Purchase 204 32.50 September 21 Sale 134 49.00 Chair uses the perpetual inventory system and the FIFO method for inventory costing. Required: 1. Prepare journal entries to record the transactions on July 13 and July 29. Assume that all sales and purchase transactions are on account. 2. Compute the cost of ending inventory at September 30, 2021, and the cost of sales, gross profit, and gross profit percentage for the quarter ended September 30, 2021. 3. Would Chair's gross profit increase or decrease if it uses the weighted average cost method instead of FIFO? Explain without re-computing the gross prof 4. Chair is required to report its ending inventory at the lower of cost and net realizable value. The net realizable value of the chairs decreased to $33 per unit on September 30, 2021. Prepare the adjusting entry to reflect the application of the LC&NRV rule. 5. Assume that Chair's accountant did not apply the LC&NRV rule, and that the company inventory turnover for the quarter ended September 30, 2021 is 1.45. Recompute the inventory turnover using the correct value for ending inventory.