Question 1

Presented below are selected transactions for Scotian Corporation during July.

Jul 1 Sold merchandise to Brunswick Inc. for $800, terms 3/10, n/30. The merchandise sold cost $400.

2 Purchased merchandise from Founders Corporation for $4,500, terms 4/10, n/30.

3 Paid freight charges of $100 on items purchased on July 2.

4 Purchased merchandise from Edward Company Ltd. for $5,000, n/30.

10 Received payment from Brunswick Inc. for purchase of July 1.

11 Paid Founders Corporation for July 2 purchase.

Instructions

(a) Record the above transactions for Scotian Corporation, assuming a perpetual inventory system is used. The cost of goods sold on July 1 was determined to be $400.

(b) Record the above transactions for Scotian Corporation, assuming a periodic inventory system is used.

Question 2

Given the following information, prepare in good form the cost of goods sold section of an income statement, using the periodic inventory system.

...... Beginning inventory...................................................... $15,000

...... Ending inventory........................................................... 16,000

...... Freight in....................................................................... 4,000

...... Purchases..................................................................... 38,000

...... Purchase discounts....................................................... 500

...... Purchase returns and allowances................................. 1,800

Question 3

Owl Ltd. sells many products. Hoot is one of its popular items. Below is an analysis of the inventory purchases and sales of Hoot for the month of March. Owl uses the perpetual inventory system.

Purchases Sales

Units Unit Cost Units Selling Price/Unit

Mar 1 Beginning inventory 600 $40

3 Purchase 100 60

4 Sales 190 $80

10 Purchase 100 66

16 Sales 275 120

19 Sales 220 120

25 Sales 75 120

30 Purchase 460 75

Instructions

(a) Using the FIFO cost method, calculate the cost of goods sold for March. Show calculations.

(b) Using the average cost method, calculate the ending inventory at March 31. Show calculations and use unrounded numbers in your calculations but round to the nearest cent for presentation purposes in your answer.