Chapter 6, Problem 6.30BE

LO 1, 2

(Learning Objectives 1, 2: Show how to account for inventory transactions; apply the FIFO cost method) Spear Corporation’s inventory records for its retail division show the following at May 31:

May 1	Beginning inventory .........	10 units @ $160 = $1,600
15	Purchase ...........................	5 units@ 161 = 805
26	Purchase ............................	14 units @ 170 = 2,380

 At May 31, 11 of these units are on hand. Journalize the following for Spear Corporation under the perpetual system.

  1.    Total May purchases in one summary entry. All purchases were on credit.

  2.    Total May sales and cost of goods sold in two summary entries. The selling price was $560 per unit, and all sales were on credit. Assume that Spear uses the FIFO inventory method.

  3.    Under FIFO, how much gross profit would Spear earn for the month ending May 31? What is the FIFO cost of Spear Corporation’s ending inventory?