Required information [The following information applies to the questions displayed below.] Pam’s Creations had the following sales and purchase transactions during Year 2. Beginning inventory consisted of 60 items at $350 each. The company uses the FIFO cost flow assumption and keeps perpetual inventory records. DateTransactionDescriptionMarch 5Purchased50 items @ $370April 10Sold30 items @ $450June 19Sold60 items @ $450September 16Purchased70 items @ $390November 28Sold45 items @ $480 Requireda. Record the inventory transactions in general journal format. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)b. Calculate the gross margin Pam’s Creations would report on the Year 2 income statement.c. Determine the ending inventory balance Pam’s Creations would report on the December 31, Year 2, balance sheet.

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Description: Required information [The following information applies to the questions displayed below.] Pam’s Creations had the following sales and purchase transactions during Year 2. Beginning inventory consisted of 60 items at $350 each. The company uses the F

First-in-first-out (FIFO): It implies to one of the methods that is used by the business in the…

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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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Required information

[The following information applies to the questions displayed below.]

Pam’s Creations had the following sales and purchase transactions during Year 2. Beginning inventory consisted of 60 items at $350 each. The company uses the FIFO cost flow assumption and keeps perpetual inventory records.

Date	Transaction	Description
March 5	Purchased	50 items @ $370
April 10	Sold	30 items @ $450
June 19	Sold	60 items @ $450
September 16	Purchased	70 items @ $390
November 28	Sold	45 items @ $480

Required
a. Record the inventory transactions in general journal format. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

b. Calculate the gross margin Pam’s Creations would report on the Year 2 income statement.

c. Determine the ending inventory balance Pam’s Creations would report on the December 31, Year 2, balance sheet.

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