Fong Sai-Yuk Company sells one product. Presented below is information for Janua
ID: 2475310 • Letter: F
Question
Fong Sai-Yuk Company sells one product. Presented below is information for January for Fong Sai-Yuk Company.
Fong Sai-Yuk uses the FIFO cost flow assumption. All purchases and sales are on account.
(a) Assume Fong Sai-Yuk uses a periodic system. Prepare all necessary journal entries, including the end-of-month closing entry to record cost of goods sold. A physical count indicates that the ending inventory for January is 121 units
(b) Compute gross profit using the periodic system.
(c) Assume Fong Sai-Yuk uses a perpetual system. Prepare all necessary journal entries.
Jan. 1 Inventory 115 units at $5 each 4 Sale 90 units at $8 each 11 Purchase 145 units at $7 each 13 Sale 113 units at $9 each 20 Purchase 166 units at $7 each 27 Sale 102 units at $10 eachExplanation / Answer
(a) Journal entries Under Periodic inventory system
Date
Account head and explanation
Debit
Credit
04-Jan
Cash
720.00
Sale (90 units of $8 each)
720.00
11-Jan
Purchases (145 units of $7 each)
1,015.00
Cash
1,015.00
13-Jan
Cash
1,017.00
Sale (113 units of $9 each)
1,017.00
20-Jan
Purchases (166 units of $7 each)
1,162.00
Cash
1,162.00
27-Jan
Cash
1,020.00
Sale (102 units of $10 each)
1,020.00
30-Jan
Inventory (121 units at 7 each)
847.00
Cost of goods sold (Balancing Fig)
1,905.00
Inventory (Beginning Inventory)
575.00
Purchases
2,177.00
(b) Gross profit under Periodic inventory system
Sale
2,757
Less: Cost of goods sold
1,905
Gross Profit
852
(c) Journal entries under Perpetual inventory system
Date
Account head and explanation
Debit
Credit
04-Jan
Cash
720.00
Sale (90 units of $8 each)
720.00
Cost of goods sold (90 units at $5 each)
450.00
Inventory
450.00
11-Jan
Inventory (145 units at $7 each)
1,015.00
Cash
1,015.00
13-Jan
Cash
1,017.00
Sale (113 units of $9 each)
1,017.00
Cost of goods sold (25 units at $5 each + 88 units at $7 each)
741.00
Inventory
741.00
20-Jan
Inventory (166 units at $7 each)
1,162.00
Cash
1,162.00
27-Jan
Cash
1,020.00
Sale (102 units of $10 each)
1,020.00
Cost of goods sold (57 units at $7 each + 45 units at $7 each)
714.00
Inventory
714.00
30-Jan
Inventory (121 units at 7 each)
847.00
Cost of goods sold
1,905.00
Inventory
575.00
Purchases
2,177.00
(a) Journal entries Under Periodic inventory system
Date
Account head and explanation
Debit
Credit
04-Jan
Cash
720.00
Sale (90 units of $8 each)
720.00
11-Jan
Purchases (145 units of $7 each)
1,015.00
Cash
1,015.00
13-Jan
Cash
1,017.00
Sale (113 units of $9 each)
1,017.00
20-Jan
Purchases (166 units of $7 each)
1,162.00
Cash
1,162.00
27-Jan
Cash
1,020.00
Sale (102 units of $10 each)
1,020.00
30-Jan
Inventory (121 units at 7 each)
847.00
Cost of goods sold (Balancing Fig)
1,905.00
Inventory (Beginning Inventory)
575.00
Purchases
2,177.00