Beginning inventory $188,200
Purchases on credit during the year 400,500
Cost of goods sold during the year 500,600
Sales (70% on credit) during the year 755,400
a. Prepare entries to record the purchase of inventory, cost of goods sold, and sales, during 2010 using the perpetual inventory system.
b. Compute the balance in the inventory account on December 31, 2010.
Problem Three: (15 Points)
The following information is available for Williams Door Products Corporation:
Sales revenueâ€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦…. $280,000
Purchases (cost)â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦ 200,000
Sales commissionsâ€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦… 9,000
Purchase discountsâ€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦.. 8,000
Sales discountsâ€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦. 7,000
Purchase returns and allowancesâ€¦â€¦â€¦.. 4,300
Sales returns and allowancesâ€¦â€¦â€¦â€¦â€¦. 2,500
Freight-in â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦ 800
Freight- outâ€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦. 700
Beginning inventoryâ€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦.. 10,000
Ending inventoryâ€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦… 9,150
Calculate the following for Williams Door Products Corporation:
a. Net sales
b. Net purchases
c. Gross profit rate
Problem Four: (15 Points)
Last year Cramer Sales sold 190 units @ $340 each. Cash selling and administrative expenses were $15,000. The following information is also available:
Beginning inventory 30 units @ $150
Feb. 3 Purchase 60 units @ $160
June 2 Purchase 70 units @ $170
Oct. 1 Purchase 40 units @ $180
The companyâ€™s income tax rate is 30%.
Compute the following:
1. Cost of goods using the FIFO method.
2. Ending inventory using the LIFO method.
3. Gross margin using the weighted-average method.
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