Cycles started

January

with

12

bicycles that cost

$42

each. On

January 16,

Mountain

purchased

40

bicycles at

$68

each. On

January 31,

Mountain

sold

20

bicycles for

$98

each.

Requirements

1.	Prepare Mountain Cycle's perpetual inventory record assuming the company uses the weighted-average inventory costing method.
2.	Journalize the January 16 purchase of merchandise inventory on account and the January 31 sale of merchandise inventory on account.

Question content area bottom

Part 1

Requirement 1. Prepare

Mountain

Cycle's perpetual inventory record assuming the company uses the weighted-average inventory costing method.

Start by entering the beginning inventory balances. Enter the transactions in chronological order, calculating new inventory on hand balances after each transaction. Once all of the transactions have been entered into the perpetual record, calculate the quantity and total cost of inventory purchased, sold, and on hand at the end of the period. (Abbreviation used: QTY = Quantity; Tot. = Total)

Mountain Cycles
	Purchases			Cost of Goods Sold			Inventory on Hand
Date	QTY	Unit Cost	Tot. Cost	QTY	Unit Cost	Tot. Cost	QTY	Unit Cost	Tot. Cost
Jan. 1

Part 2

Jan. 16

Part 3

Jan. 31

Part 4

Totals

Part 5

Requirement 2. Journalize the

January 16

purchase of merchandise inventory on account and the

January 31

sale of merchandise inventory on account. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)

January 16:

Purchased merchandise inventory on account.

Date		Accounts and Explanation	Debit	Credit
Jan.	16

Part 6

January 31:

Sale of merchandise inventory on account.

Begin by preparing the entry to journalize the sale portion of the transaction. Do not record the expense related to the sale. We will do that in the following step. (Assume that

Mountain

sold the bicycles for

$98

each.)

Date		Accounts and Explanation	Debit	Credit
Jan.	31

Part 7

Now journalize the expense related to the

January

31 sale.

Review the perpetual inventory record you prepared in Requirement 1.

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Date		Accounts and Explanation	Debit	Credit
Jan.	31