You are given the following information for Danielle Company for the month ended June 30, 2014: Danielle
Question:
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Danielle 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 average. (Hint: Round the average cost per unit to two decimal places.)
(b) Assume the sales price was $90 per unit for the goods sold on June 10, and $95 per unit for the sale on June 25. Prepare journal entries to record the June 10 sale and the June 18 purchase.
(c) At the end of June, the company counted its inventory. There were 37 units on hand. What journal entry, if any, should the company make to record the difference?
(d) 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 average provide more useful information than FIFO?
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...
Step by Step Answer:
a Date Purchases Cost of Goods Sold Balance Units Cost Total Units Cost Total Units Cost Total June ...View the full answer
Accounting Principles Part 1
ISBN: 978-1118306789
6th Canadian edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Kinnear, Joan E. Barlow
