Explanation Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically. Debit and credit rules: Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts. Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts. Weighted average cost flow method: Under average cost method, company calculates a new average after every purchase. It is determined by dividing the cost of goods available for sale by the units on hand. Weighted-average Cost = Total Cost of Goods Available For Sale Total Number of Units Available For Sale Prepare journal entry for the given transaction of Company STC; assume that the company uses weighted average in its perpetual inventory system as follows: Prepare journal entry for the transaction occurred on May 2 . Date Account Titles and Explanations Post. Ref. Debit ($) Credit ($) May 2 Accounts Receivable (Refer working note 1) 3,750 Sales Revenue 3,750 (To record the delivery of inventory to customers on account) Cost of Goods Sold (Refer working note 1) 1,600 Inventories 1,600 (To record the cost of goods sold ) Table (1) Description: Accounts Receivable is an asset and there is an increase in the value of asset. So debit the accounts receivable account with $3,750. Sales Revenue is a component of stockholder’s equity and there is an increase in the value of stockholder’s equity. So credit the sales revenue account for $3,750. Cost of goods sold is an expense and increased; hence it has decreased the equity by $1,600. Therefore, debit cost of goods sold account with $1,600. Inventory is an asset and decreased by $1,600. Therefore, credit the inventory account with $1,600. Prepare journal entry for the transaction occurred on May 4

GEN COMBO LL FUNDAMENTALS OF FINANCIAL ACCOUNTING; CONNECT ACCESS CARD

6th Edition

ISBN: 9781260260083

Author: Fred Phillips Associate Professor

Publisher: McGraw-Hill Education

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in…

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Chapter 7, Problem 10COP

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Prepare journal entry for the given transaction of Company STC; assume that the company uses weighted average in its perpetual inventory system.

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Chapter 7, Problem 9COP

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PA9. 10.3 Calculate a) cost of goods sold, b) ending inventory, and c) gross margin for A76 Company, considering the following transactions under three different cost allocation methods and using perpetual inventory updating. Provide calculations for first-in, first-out (FIFO). a anal Accountingp x+ eburowner abcocteunccT atructorm.omesourcese oand.oeyeinancia.conccountingpar = Contes O Ote p IA t 700 of soss LD Pegevie 692 Chapter 10 Inventory PA9. LO 10.3 Calculate a) cost of goods sold, b) ending inventory, and c) gross margin for A76 Company, considering the following transactions under three different cost allocation methods and using perpetual inventory updating. Provide calculations for first-in, first-out (FIFO). Number of Units Unit Cost Sales Beginning inventory Sold Purchased Sold Purchased Sold Ending inventory 240 160 520 $100 $140 103 400 400 142 110 370 144 230

Required:Hemming uses a perpetual inventory system. 3. Compute the gross margin for FIFO method and LIFO method.

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GEN COMBO LL FUNDAMENTALS OF FINANCIAL ACCOUNTING; CONNECT ACCESS CARD

Ch. 7 - What are three goals of inventory management?Ch. 7 - Describe the specific types of inventory reported...Ch. 7 - The chapter discussed four inventory costing...Ch. 7 - Which inventory cost flow method is most similar...Ch. 7 - Where possible, the inventory costing method...Ch. 7 - Contrast the effects of LIFO versus FIFO on ending...Ch. 7 - Contrast the income statement effect of LIFO...Ch. 7 - Several managers in your company are experiencing...Ch. 7 - Explain briefly the application of the LCM rule to...Ch. 7 - Prob. 10Q

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Prepare journal entry for the given transaction of Company STC; assume that the company uses weighted average in its perpetual inventory system.

Solution Summary: The author explains that journal entry is a set of economic events which can be measured in monetary terms.

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Prepare journal entry for the given transaction of Company STC; assume that the company uses weighted average in its perpetual inventory system.

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