Problem One: During the year, Masks R Us Corporation has the following inventory transactions.

Date	Transaction	Number of Units	Unit Cost	Total Cost
Jan. 1	Beginning inventory	50	$42	$ 2,100
Apr. 7	Purchase	130	44	5,720
Jul. 16	Purchase	200	47	9,400
Oct. 6	Purchase	110	48	5,280
		490		$22,500

For the entire year, the company sells 440 units of inventory for $60 each.

Required:

1.

Using FIFO, calculate (a) ending inventory, (b) cost of goods sold, (c) sales revenue, and (d) gross profit.

a) Ending Inventory
b) CGS
c) Sales Revenue
d) Gross Profit

2.

Using LIFO, calculate (a) ending inventory, (b) cost of goods sold, (c) sales revenue, and (d) gross profit.

a) Ending Inventory
b) CGS
c) Sales Revenue
d) Gross Profit

3.

Using weighted-average cost, calculate (a) ending inventory, (b) cost of goods sold, (c) sales revenue, and (d) gross profit.

a) Ending Inventory
b) CGS
c) Sales Revenue
d) Gross Profit

4.

Determine which method will result in higher profitability when inventory costs are rising.

Problem Two: JC Bikes has the following transactions during May.

May 2	Purchases bikes on account from Bikers R Us Wholesale for $3,300, terms 1/10, n/30.
May 3	Pays cash for freight costs of $200 on bikes purchased from BRU.
May 5	Returns bikes with a cost of $400 to BRU because part of the order is incorrect.
May 10	Pays the full amount due to BRU.
May 30	Sells all Bikes purchased on May 2 (less those returned on May 5) for $4,000 on account.

Required:

1.

Record the transactions of JC Bikes, assuming the company uses a perpetual inventory system.

Date	Account	Debit	Credit

2.

Assume that payment to BRU is made on May 24 instead of May 10. Record this payment.

Date	Account	Debit	Credit