Answered: Prepare a perpetual inventory record…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Prepare a perpetual inventory record for All Things Auto, using the first in, first out (FIFO) method
to determine the value of ending inventory at December 31, 2020, and the total amount to be assigned to
cost of goods sold for the period.

Transcribed Image Text:All Things Auto are retailers who purchase and sell vehicle parts & accessories, including batteries. The business uses a perpetual inventory system and began the last quarter of 2020 with merchandise inventory of 10 batteries of the "DieHard" brand at a total cost of $168,200. The following transactions, relating to the "DieHard" brand were completed during the quarter: October 5 Purchased 15 batteries at a cost of $17,020 each. October 14 Sold 18 batteries at $22,250 per battery Purchased 24 batteries at a cost of $18,175 each but the supplier gave a 4% quantity discount. October 22 November 10 Sold 15 batteries to Orion Auto Ltd and 10 batteries to Brown's Auto Detailing at a price of $23,990 each. November 12 Owing to an increased demand for this brand of batteries, 30 batteries were purchased on account at a cost of $17,612 each. In addition, All Things Auto paid $288 in cash on each battery to have the inventory shipped from the vendor's warehouse to their location. November 27 Sold 23 batteries which yielded total sales revenue of $576,840. (8 of these batteries were sold on account to Middletown Fuel & Auto Accessories a longstanding customer) November 30 A customer, to whom 5 batteries were sold at the end of the business day on November 27, returned 2 units, as they were of the "Duralast" brand. December 2 In preparation for the festive season, All Things purchased 25 batteries at a total cost of $474,500. December 15 5 of the batteries purchased on December 2 were returned to the supplier, as the poles were either corroded or otherwise badly damaged. December 30 Sold 22 batteries to two customers (Omega Traders & Middleton Auto Accessories) at a selling price of $26,950 each. December 31 An actual count of inventory was carried out which revealed that there were 9 units of the "DieHard" brand in the warehouse. All purchases were on account and received on the dates stated.

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