Answer:
Dunne Co.
Schedule of Cost of Goods Sold
FIFO Method
For the Three Months Ended June 30
Purchases Cost of Goods Sold Inventory
Date Description Quantity Unit Cost Total Cost Sales
Apr. 3 Inventory 48 $150 $7,200
Apr. 8 Purchase 96 180 17,280
Apr. 11 Sale 64 500 32,000
Apr. 30 Sale 40 500 20,000
May 8 Purchase 80 200 16,000
May 10 Sale 48 500 24,000
May 19 Sale 24 500 12,000
May 28 Purchase 80 220 17,600
June 5 Sale 48 525 25,200
June 16 Sale 64 525 33,600
June 21 Purchase 144 240 34,560
June 28 Sale 72 525 37,800
June 30 Total 448 360 $92,640 $184,600
June 30 Balances 88 $240 $21,120
2. Determination of total sales and cost of goods sold and Journal Entries:
Debit Accounts Receivable $184,600
Credit Sales Revenue $184,600
To record the sales of goods on account for the period.
Debit Cost of Goods Sold $92,640
Credit Inventory $92,640
To record the cost of goods sold for the period.
3. Income Statement for determining the gross profit:
Sales Revenue $184,600
Cost of goods sold $92,640
Gross profit $91,960
4. Determination of the ending inventory cost of June 30:
Ending Inventory units = 88
Cost per unit (FIFO) = $240
Total = $21,120
5. The ending inventory would be lower if the ending inventory was valued using the Last-in, First-out (LIFO) method. The purchase price was increasing instead. Using LIFO means that ending inventory would be valued at the cost of the purchases in earlier months because of the assumption with LIFO that goods sold are from the last purchases instead of the earlier purchases.
Explanation:
