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.) E 9-1

Req. 1

Journal
Perpetual System
	ACCOUNTS AND EXPLANATIONS	DEBIT	CREDIT
		Thousands
1.	Purchases:
	Inventory	3,105
	Accounts Payable		3,105

2.	Sales:
	Cash	879
	Accounts Receivable	3,516
	Sales Revenue		4,395

	Cost of Goods Sold	2,821
	Inventory		2,821

3.	End-of-period entries:
	None

(continued) E 9-1

Req. 2

Balance sheet:

Thousands

Current assets:

Inventory

$ 654

Income statement:

Sales revenue

4,395

Cost of goods sold

2,821*

Gross profit

$1,574

Req. 3 (Computation of cost of goods sold in the periodic system)

*$370 + $3,105 ! $654 = $2,821

(15-20 min.) E 9-2

Periodic System
		Thousands
	Purchases	3,105
	Accounts Payable		3,105

	Cash	879
	Accounts Receivable	3,516
	Sales Revenue		4,395

	End-of-period entries:

	Cost of Goods Sold	370
	Inventory (beginning balance)		370

	Inventory (ending balance)	654*
	Cost of Goods Sold		654

	Cost of Goods Sold	3,105
	Purchases		3,105

__________

*$370 + $3,105 ! $2,821 = $654

(continued) E 9-2

Req. 2

Balance sheet:

Thousands

Current assets:

Inventory

$ 654

Income statement:

Sales revenue

4,395

Cost of goods sold:

Beginning inventory

$ 370

Purchases

3,105

Cost of goods available

3,475

Ending inventory

(654)

Cost of goods sold

2,821

Gross profit

$1,574

(10-15 min.) E 9-3

For the year ended January 31, 2000:

Millions

Budgeted cost of goods sold ($8,191 ´ 1.06)………...

$8,682

Budgeted ending inventory…………………………….

2,020

Budgeted cost of goods available for sale……………..

10,702

Actual beginning inventory……………………………

(1,902)

Budgeted purchases……………………………………

$8,800

(15-20 min.) E 9-4

Cost of goods available for sale

Oct.

1

Beginning inventory

9

@

$160

=

$1,440

8

Purchase

4

@

160

640

15

Purchase

12

@

170

2,040

26

Purchase

3

@

176

528

31

Goods available for sale

28

$4,648

Ending inventory Cost of goods sold

(1) Specific unit cost (4 @ $170) + (4 @ $160) = $1,320 $4,648 ! $1,320 = $3,328

(2) Weighted- $4,648 ) 28 units = average unit cost

average cost of $166 ´ 8 = $1,328 $4,648 ! $1,328 = $3,320

(3) FIFO (3 @ $176) + (5 @ $170) = $1,378 $4,648 ! $1,378 = $3,270

(4) LIFO 8 @ $160 = $1,280 $4,648 ! $1,280 = $3,368

(10 min.) E 9-5

(Perpetual Inventory System)

Journal
DATE		ACCOUNTS AND EXPLANATIONS	DEBIT	CREDIT
	a.	Inventory ($640 + $2,040 + $528)	3,208
		Accounts Payable		3,208

	b.	Accounts Receivable (20 @ $300)	6,000
		Sales Revenue		6,000

		Cost of Goods Sold ($4,648 ! $1,378)	3,270
		Inventory		3,270

(15 min.) E 9-6

(Periodic Inventory System)

Journal
DATE		ACCOUNTS AND EXPLANATIONS	DEBIT	CREDIT
	a.	Purchases ($640 + $2,040 + $528)	3,208
		Accounts Payable		3,208

	b.	Accounts Receivable (20 @ $300)	6,000
		Sales Revenue		6,000

	c.	Cost of Goods Sold	1,440
		Inventory (beginning balance)		1,440

		Inventory [ending balance: (8 @ $160)]	1,280
		Cost of Goods Sold		1,280

		Cost of Goods Sold	3,208
		Purchases		3,208

Cost of Goods Sold
Beginning inventory		Ending inventory	1,280
(9 ´ $160)	1,440
Purchases	3,208
	3,368

E 9-10

Perpetual Inventory Record
ITEM: HONEYDEW GUITARS
DATE		RECEIVED			SOLD			BALANCE
DATE		QTY	UNIT COST	TOTAL COST	QTY	UNIT COST	TOTAL COST	QTY	UNIT COST	TOTAL COST
May	1							5	$95	$475
	6				3	$95	$285	2	95	190
	8	11	$83	$913				2	95	190
								11	83	913
	17				2	95	190
					2	83	166	9	83	747
	30				1	83	83	8	83	$664
Totals		11	—	$913	8	—	$724	8	$83	$664

Cost of Ending

goods inventory

sold

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Balance sheet:	Thousands
Current assets:
Inventory	$ 654

Income statement:
Sales revenue	4,395
Cost of goods sold	2,821*
Gross profit	$1,574

For the year ended January 31, 2000:	Millions

Budgeted cost of goods sold ($8,191 ´ 1.06)………...	$8,682
Budgeted ending inventory…………………………….	2,020
Budgeted cost of goods available for sale……………..	10,702
Actual beginning inventory……………………………	(1,902)
Budgeted purchases……………………………………	$8,800

		Cost of goods available for sale
Oct.	1	Beginning inventory	9	@	$160	=	$1,440
	8	Purchase	4	@	160		640
	15	Purchase	12	@	170		2,040
	26	Purchase	3	@	176		528
	31	Goods available for sale	28				$4,648