Prepare in journal form, the closing entries for the year ended December 31 2014
ID: 2444401 • Letter: P
Question
Prepare in journal form, the closing entries for the year ended December 31 2014 NOTE: Students are encouraged to prepare their own T-accounts, on a separate serateh sheet of paper, and track from the beginning balance thru all journal transae transactions to ending balances for all accounts used in this problem. Do not turn in your separate seratch sheet of paper those are student personal working papers and not part of any solution required for this exam roblem 2: 8 P JEN uses the periodic inventory method and had the following inventory events during January Units Unit Sales Date Units Sold Purchased Unit Cost Date $10.00 Jan. 1 Jan. 5 Jan. 10 Jan. 15 Jan. 20 150 225 100 150 200 150 75 $7.00 Jan. 2 7.20 Jan. 7 7.50 7.80 Jan. 17 7.95 8.00 8.20 100 125 75 200 150 10.00 12.00 12.50 15.00 Jan. 24 Jan. 25 Jan. 30 Note: January 1 amount was the beginning inventory and unit value. (Round all total dollar values to the nearest dollar. Round all unit values to the neares penny.) nny) 220 6981 ACCT 220 6981 Page 8 ofExplanation / Answer
a.Calculate cost of goods available for sale
The cost of goods available for sale is the total recorded cost of beginning finished goods or merchandise inventory in an accounting period, plus the cost of any finished goods produced or merchandise added during the period. Thus, the calculation of the cost of goods available for sale is:
Beginning sellable inventory + Finished goods produced + Merchandise acquired
=150 * 7 +225 * 7.20 +100 *7.50 +150 *7.80 +200 * 7.95 +150 * 8.00 +75 * 8.20=
=7,995$
b.Calculate the dollar value of sales
=Units sold * Selling price
=100* 10 +125 *10 +75 * 12 +200 * 12.50 +150 *15.00=7900 $
c.Value of Ending Inventory and Cost of goods sold
Value of Ending inventory=Beginning stock+Purchased-Closing stock
LIF0-Last in first out
Value of cost of goods sold =75*8.20+150*8.00+200*7.95+150*7.80+75 *7.50=5,137.50$
Total units sold=650 units
Value of ending inventory=25*7.50+225*7.20+150*7.00=2,857.5$
FIFO=First in first out
Value of cost of goods sold=150*7.00+225*7.20+100*7.50+150*7.80+25*7.95=4,788.75$
Value of ending inventory =175 *7.95+150*8.00+75*8.20=3,206.25$