Question
Johnson Corporation began 2016 with inventory of 12,000 units of its only product. The units cost $8 each. The company uses a periodic inventory system
Johnson Corporation began 2016 with inventory of 12,000 units of its only product. The units cost $8 each. The company uses a periodic inventory system and the LIFO cost method. The following transactions occurred during 2016: |
a. | Purchased 60,000 additional units at a cost of $10 per unit. Terms of the purchases were 2/10, n/30, and 100% of the purchases were paid for within the 10-day discount period. The company uses the gross method to record purchase discounts. The merchandise was purchased f.o.b. shipping point and freight charges of $0.60 per unit were paid by Johnson. | ||||||
b. | 1,200 units purchased during the year were returned to suppliers for credit. Johnson was also given credit for the freight charges of $0.60 per unit it had paid on the original purchase. The units were defective and were returned two days after they were received. | ||||||
c. | Sales for the year totaled 55,000 units at $18 per unit. | ||||||
d. | On December 28, 2016, Johnson purchased 5,200 additional units at $11 each. The goods were shipped f.o.b. destination and arrived at Johnson's warehouse on January 4, 2017. | ||||||
e. | 15,800 units were on hand at the end of 2016.
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