PROBLEM

Problem 1.

On October 1, Belton 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 Kuhn Bicycle Company, terms 2/10, n/30.

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

7Received credit from Kuhn Bicycle Company for the return of 2 defective bicycles.

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

14Paid Kuhn Bicycle Company in full, less discount.

Instructions

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

Problem 2

Kegin Company sells many products. Whamo is one of its popular items. Below is an analysis of the inventory purchases and sales of Whamo for the month of March. Kegin Company uses the periodic inventory system.

PurchasesSales

UnitsUnit CostUnitsSelling Price/Unit

3/1Beginning inventory100$40

3/3Purchase60$50

3/4Sales70$80

3/10Purchase200$55

3/16Sales80$90

3/19Sales60$90

3/25Sales70$90

3/30Purchase40$60

Instructions

(a)Using the FIFO assumption, calculate the amount charged to cost of goods sold for March. (Show computations)

(b)Using the weighted average method, calculate the amount assigned to the inventory on hand on March 31. (Show computations)