On October 1, Taylor Bicycle Store had an inventory of 20 ten speed bicycles at a cost of

$200 each. During the month of October, the following transactions occurred.

Oct.4Purchased 25 bicycles at a cost of $200 each from Lang Bicycle

Company, terms 2/10, n/30.

6Sold 15 bicycles to Team America for $300 each, terms 2/10, n/30.

7Received credit from Lang Bicycle Company for the return of 2 defective

bicycles.

13Issued a credit memo to Team America for the return of a defective

bicycle.

14Paid Lang Bicycle Company in full, less discount.

INSTRUCTIONS

Prepare the journal entries to record the transactions, assuming the company uses a perpetual inventory system.

DATE	TITLE	DEBIT	CREDIT

-9-

The following information is available for Gumbel Company:

Beginning inventory600 units at $4

First purchase900 units at $5

Second purchase500 units at $6

Assume that Gumbel uses a periodic inventory system and that there are 700 units left at the end of the month.

62.Compute the cost of the ending inventory under the

(a)FIFO method.

(b)LIFO method.

63.Using the information above, compute each of the following under the average cost

method:

(a)Cost of the ending inventory.

(b)Cost of goods sold.