You are given the following information for Churchill Company for the month ended November 30, 2017: Churchill

Question:

You are given the following information for Churchill Company for the month ended November 30, 2017:

Churchill Company uses a perpetual inventory system. All sales and purchases are on account.
Instructions
(a) Calculate the cost of goods sold and the ending inventory using FIFO.
(b) Assume the sales price was $66 per unit for the goods sold on November 15, and $60 per unit for the sale on November 29. Prepare journal entries to record the November 22 purchase and the November 29 sale.
(c) Calculate gross profit for November.
(d) Assume that at the end of November, the company counted its inventory. There are 73 units on hand. What journal entry, if any, should the company make to record the shortage?
(e) If the company had not discovered this shortage, what would be overstated or understated on the balance sheet and income statement and by what amount?
Taking It Further
In what respects does FIFO provide more useful information than weighted average?

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...