Explanation Journal entry : Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically. Rules of Debit and Credit: Following rules are followed for debiting and crediting different accounts while they occur in business transactions: Debit , all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities. Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, and expenses. Prepare the journal entries to record cost of goods sold under specific identification method as follows: Date Account Title and Explanation Post Ref. Debit Credit Cost of goods sold (1) $137,800 Inventory $137,800 (To record the cost of goods sold incurred) Table (1) Cost of goods sold is an operating expense account and decreases the stockholders’ equity account by $137,800. Therefore, debit cost of goods account with $137,800. Inventory is an asset account, and it decreases the value of assets by $137,800. Therefore, credit inventory account with $137,800. Working note: Calculate the value of cost of goods sold under separate identification method Table (2) (1) Prepare the journal entries to record cost of goods sold under average cost method as follows: Date Account Title and Explanation Post Ref. Debit Credit Cost of goods sold (3) $137,700 Inventory $137,700 (To record the cost of goods sold incurred) Table (3) Cost of goods sold is an operating expense account and decreases the stockholders’ equity account by $137,700. Therefore, debit cost of goods account with $137,700. Inventory is an asset account, and it decreases the value of assets by $137,800. Therefore, credit inventory account with $137,700. Working note: Calculate average cost per unit Average cost on May 10 } = ( Total cost of units purchased on April 9 + Total cost of units purchased on May 1 ) ( Number of units purchased on April 9 + Number of units purchased on May 1 ) = $ 105 , 000 + $48,000 70 units + 30 units = $153,000 100 units = $ 1 , 530 (2) Calculate the value of cost of goods sold under average cost method

17th Edition

ISBN: 9781259692390

Author: Jan Williams, Susan Haka, Mark S Bettner, Joseph V Carcello

Publisher: McGraw-Hill Education

See similar textbooks

Question

Chapter 8, Problem 2E

To determine

Prepare the journal entries to record cost of goods sold under (a) specific identification method, (b) average-cost method, (c) FIFO method, and (e) LIFO method, and discuss the financial reporting differences that may arise from choosing the FIFO method over the LIFO method.

Expert Solution & Answer

Chapter 8 Solutions

Financial Accounting

Ch. 8 - Prob. 1STQ Ch. 8 - Prob. 2STQ Ch. 8 - Prob. 3STQ Ch. 8 - Prob. 4STQ Ch. 8 - Prob. 5STQ Ch. 8 - Prob. 6STQ Ch. 8 - Prob. 1DQ Ch. 8 - Prob. 2DQ Ch. 8 - Prob. 3DQ Ch. 8 - Prob. 4DQ

Ch. 8 - Prob. 5DQ Ch. 8 - Prob. 6DQ Ch. 8 - Prob. 7DQ Ch. 8 - Prob. 8DQ Ch. 8 - Prob. 9DQ Ch. 8 - Prob. 10DQ Ch. 8 - Prob. 11DQ Ch. 8 - Prob. 12DQ Ch. 8 - Prob. 13DQ Ch. 8 - Prob. 14DQ Ch. 8 - Prob. 15DQ Ch. 8 - Prob. 1BE Ch. 8 - Prob. 2BE Ch. 8 - Prob. 3BE Ch. 8 - Prob. 4BE Ch. 8 - Prob. 5BE Ch. 8 - Prob. 6BE Ch. 8 - Prob. 7BE Ch. 8 - Prob. 8BE Ch. 8 - Prob. 9BE Ch. 8 - Prob. 10BE Ch. 8 - Prob. 1E Ch. 8 - Prob. 2E Ch. 8 - Prob. 3E Ch. 8 - Prob. 4E Ch. 8 - Prob. 5E Ch. 8 - Prob. 6E Ch. 8 - Prob. 7E Ch. 8 - Prob. 8E Ch. 8 - Prob. 9E Ch. 8 - Prob. 10E Ch. 8 - Prob. 11E Ch. 8 - Prob. 12E Ch. 8 - Prob. 13E Ch. 8 - Prob. 14E Ch. 8 - Prob. 15E Ch. 8 - Prob. 1PA Ch. 8 - Prob. 2PA Ch. 8 - Prob. 3PA Ch. 8 - Prob. 4PA Ch. 8 - Prob. 5PA Ch. 8 - Prob. 6PA Ch. 8 - Prob. 7PA Ch. 8 - Prob. 8PA Ch. 8 - Prob. 1PB Ch. 8 - Prob. 2PB Ch. 8 - Prob. 3PB Ch. 8 - Prob. 4PB Ch. 8 - Prob. 5PB Ch. 8 - Prob. 6PB Ch. 8 - Prob. 7PB Ch. 8 - Prob. 8PB Ch. 8 - Prob. 1CTC Ch. 8 - Prob. 2CTC Ch. 8 - Prob. 3CTC Ch. 8 - Prob. 4CTC Ch. 8 - Prob. 2CP

Knowledge Booster

Recommended textbooks for you

FINANCIAL ACCOUNTING
Accounting
ISBN:9781259964947
Author:Libby
Publisher:MCG
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education