The beginning inventory at Midnight Supplies and data on purchases and sales for a three-month period ending March 31, are as follows: Date Transaction Number of Units Per Unit Total Jan. 1 Inventory 7,500 $75.00 $562,500   10 Purchase 22,500 85.00 1,912,500   28 Sale 11,250 150.00 1,687,500   30 Sale 3,750 150.00 562,500 Feb. 5 Sale 1,500 150.00 225,000   10 Purchase 54,000 87.50 4,725,000   16 Sale 27,000 160.00 4,320,000   28 Sale 25,500 160.00 4,080,000 Mar. 5 Purchase 45,000 89.50 4,027,500   14 Sale 30,000 160.00 4,800,000   25 Purchase 7,500 90.00 675,000   30 Sale 26,250 160.00 4,200,000     Instructions 1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3, 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. 5. Based upon the preceding data, would you expect the inventory using the last-in, first-out method to be higher or lower?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Topic Video
Question
The beginning inventory at Midnight Supplies and data on purchases and sales for a three-month period ending March 31, are as follows:
Date
Transaction
Number of Units
Per Unit
Total
Jan. 1 Inventory 7,500 $75.00 $562,500
  10 Purchase 22,500 85.00 1,912,500
  28 Sale 11,250 150.00 1,687,500
  30 Sale 3,750 150.00 562,500
Feb. 5 Sale 1,500 150.00 225,000
  10 Purchase 54,000 87.50 4,725,000
  16 Sale 27,000 160.00 4,320,000
  28 Sale 25,500 160.00 4,080,000
Mar. 5 Purchase 45,000 89.50 4,027,500
  14 Sale 30,000 160.00 4,800,000
  25 Purchase 7,500 90.00 675,000
  30 Sale 26,250 160.00 4,200,000
 
  Instructions
1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3, 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.
5. Based upon the preceding data, would you expect the inventory using the last-in, first-out method to be higher or lower?
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps with 4 images

Blurred answer
Knowledge Booster
Accounting for Merchandise Inventory
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education