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The beginning inventory at Funky Party Supplies and data on purchases and sales for a three-month period ending March 31, 2016, are as follows: Date

The beginning inventory at Funky Party Supplies and data on purchases and sales for a three-month period ending March 31, 2016, are as follows:

Date

Transaction Number of Units Per Unit Total
Jan. 1 Inventory 2,500 $60.00 $150,000
10 Purchase 7,500 68.00 510,000
28 Sale 3,750 120.00 450,000
30 Sale 1,250 120.00 150,000
Feb. 5 Sale 500 120.00 60,000
10 Purchase 18,000 70.00 1,260,000
16 Sale 9,000 125.00 1,125,000
28 Sale 8,500 125.00 1,062,500
Mar. 5 Purchase 15,000 71.60 1,074,000
14 Sale 10,000 125.00 1,250,000
25 Purchase 2,500 72.00 180,000
30 Sale 8,750 125.00 1,093,750
Instructions
1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 4, using the first-in, first-out method.
2. Determine the total sales and the total cost of merchandise sold for the period. Journalize the entries in the sales and cost of merchandise sold accounts. Assume that all sales were on account and date your journal entry March 31. Refer to the Chart of Accounts for exact wording of account titles.
3. Determine the gross profit from sales for the period.
4. Determine the ending inventory cost as of March 31, 2016.
5. Based upon the preceding data, would you expect the inventory using the last-in, first-out method to be higher or lower?

2. Determine the total sales and the total cost of merchandise sold for the period. Journalize the entries in the sales and cost of merchandise sold accounts. Assume that all sales were on account and date your journal entry March 31. Refer to the Chart of Accounts for exact wording of account titles.

CHART OF ACCOUNTS
Funky Party Supplies
General Ledger
ASSETS
110 Cash
111 Petty Cash
120 Accounts Receivable
131 Notes Receivable
132 Interest Receivable
141 Merchandise Inventory
145 Office Supplies
146 Store Supplies
151 Prepaid Insurance
181 Land
191 Office Equipment
192 Accumulated Depreciation-Office Equipment
193 Store Equipment
194 Accumulated Depreciation-Store Equipment
LIABILITIES
210 Accounts Payable
221 Notes Payable
222 Interest Payable
231 Salaries Payable
241 Sales Tax Payable
EQUITY
310 Common Stock
311 Retained Earnings
312 Dividends
313 Income Summary
REVENUE
410 Sales
610 Interest Revenue
EXPENSES
510 Cost of Merchandise Sold
515 Credit Card Expense
516 Cash Short and Over
520 Salaries Expense
531 Advertising Expense
532 Delivery Expense
533 Insurance Expense
534 Office Supplies Expense
535 Rent Expense
536 Repairs Expense
537 Selling Expenses
538 Store Supplies Expense
561 Depreciation Expense-Office Equipment
562 Depreciation Expense-Store Equipment
590 Miscellaneous Expense
710 Interest Expense

The beginning inventory at Funky Party Supplies and data on purchases and sales for a three-month period ending March 31, 2016, are as follows:

Date

Transaction Number of Units Per Unit Total
Jan. 1 Inventory 2,500 $60.00 $150,000
10 Purchase 7,500 68.00 510,000
28 Sale 3,750 120.00 450,000
30 Sale 1,250 120.00 150,000
Feb. 5 Sale 500 120.00 60,000
10 Purchase 18,000 70.00 1,260,000
16 Sale 9,000 125.00 1,125,000
28 Sale 8,500 125.00 1,062,500
Mar. 5 Purchase 15,000 71.60 1,074,000
14 Sale 10,000 125.00 1,250,000
25 Purchase 2,500 72.00 180,000
30 Sale 8,750 125.00 1,093,750
Instructions
1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 4, using the first-in, first-out method.
2. Determine the total sales and the total cost of merchandise sold for the period. Journalize the entries in the sales and cost of merchandise sold accounts. Assume that all sales were on account and date your journal entry March 31. Refer to the Chart of Accounts for exact wording of account titles.
3. Determine the gross profit from sales for the period.
4. Determine the ending inventory cost as of March 31, 2016.
5. Based upon the preceding data, would you expect the inventory using the last-in, first-out method to be higher or lower?

X

FIFO

1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 4, using the first-in, first-out method.

Date Purchases Cost of Merchandise Sold Inventory
2016 Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost
Jan. 1
10
10
28
28
30
Feb. 5
10
10
16
16
28
Mar. 5
5
14
14
25
25
30
30
31 Balances

PAGE 10

JOURNAL

DATE DESCRIPTION POST. REF. DEBIT CREDIT

1

2

3

4

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