Mountain Cycles started

August

with

12

bicycles that cost

$42

each. On

August 16,

Mountain

purchased

40

bicycles at

$68

each. On

August 31,

Mountain

sold

31

bicycles for

$106

each.

Requirements

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

Requirement 1. Prepare

Mountain

Cycle's perpetual inventory record assuming the company uses the FIFO 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. (Enter the oldest inventory layers first. 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
Aug. 1

Aug. 16

Aug. 31

Totals

Requirement 2. Journalize the

August 16

purchase of merchandise inventory on account and the

August 31

sale of merchandise inventory on account. (Record debits first, then credits. Select the explanation on the last line of the journal entry table. Check your spelling carefully and do not abbreviate.)

August 16:

Purchased merchandise inventory on account.

Date		Accounts and Explanation	Debit	Credit
Aug.	16

August 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

$106

each.)

Date		Accounts and Explanation	Debit	Credit
Aug.	31

Now journalize the expense related to the

August

31 sale.Review the perpetual inventory record you prepared in Requirement 1.

LOADING...

Date		Accounts and Explanation	Debit	Credit
Aug.	31