[nance101]

Please help! I am trying to figure out the cost of merchandise sold, but don't know what the entries should be for the Inventory. I ended up getting stuck on the entry for Aug. 11 Inventory.

Thank you for your time
Nance


Date Transaction Number of Units Per Unit Total

Aug. 1 Inventory 22 $2,200 $48,400
8 Purchase 18 2,250 40,500
11 Sale 12 4,800 57,600
22 Sale 11 4,800 57,600

Sept. 3 Purchase 16 2,300 36,800
10 Sale 10 5,000 25,000
21 Sale 5 5,000 25,000
30 Purchase 20 2,350 47,000

Oct. 5 Sale 20 5,250 105,000
13 Sale 12 5,250 63,000
21 Purchase 30 2,400 72,000
28 Sale 15 5,400 81,000

I have:
Inventory 22 x 2,200 = 48,400
Purchase 18 x 2,200 = 40,500
Sale (22-12)x2,200 = 22,000?

[CaptainForest]

What attachment?

[nance101]

I'm sorry, there is no attachment; the document exceeded the KB's, but I typed it out to the best of my ability:

Date... Transaction... Number of Units... Per Unit... Total
Aug. 1... Inventory... 22... $2,200... $48,400
... 8... Purchase... 18... 2,250... 40,500
... 11... Sale... 12... 4,800... 57,600
... 22... Sale... 11... 4,800... 57,600

Sept. 3... Purchase... 16... 2,300... 36,800
... 10... Sale... 10... 5,000... 25,000
... 21... Sale... 5... 5,000... 25,000
... 30... Purchase... 20... 2,350... 47,000

Oct. 5... Sale... 20... 5,250... 105,000
... 13... Sale... 12... 5,250... 63,000
... 21... Purchase... 30... 2,400... 72,000
... 28... Sale... 15... 5,400... 81,000

I have:
Inventory 22 x 2,200 = 48,400
Purchase 18 x 2,250 = 40,500
Sale (22-12)x2,200 = 22,000?

[CaptainForest]

Take a look at this website on what to do with Perpetual inventory – Perpetual and Periodic Journal Entries

Also note that FIFO means that you assume you sold your OLDEST inventory items FIRST, before others.

AUG 1
Inventory on books at 22 x 2,200 = $48,400

Aug 8 – Purchase
Dr. Inventory 40,500
Cr. AP/Cash 40,500

Aug 11 – Sale
We assume the 12 units that were sold were from Aug 1 at 2,200 per unit and NOT 2,250 per unit.

Dr. AR/Cash 57,600
Cr. Sale 57,600

Dr. COGS 26,400
Cr. Inventory 26,400
12 x 2,200 = 26,400


Summary of Inventory:
Aug 1 - 22 x 2,200 = 48,400
Aug 8 - 18 x 2,250 = add 40,500
Inventory Balance = 88,900

Aug 11 – sale of 12 units.

Inventory Balance = 62,500 (see below for calculation of 22,000+40,500)
Aug 1 – (22-12) x 2,200 = 22,000
Aug 8 - 18 x 2,250 = add 40,500

[nance101]

Thank you very much for your assistance! I did understand the way you explained it. I looked at the link that you sent me and as far as the entries made on the Perpetual Inventory record, I am still having trouble deciding what column I should use for the entries. Here is an attachment where you can see the entries that I made. I really would like to understand this perpetual inventory record a lot better and the link you sent me has a dissimilar format than the one my instructor has given for homework. I greatly appreciate your help. :o

[CaptainForest]

Your chart looks nice.

Under the inventory column…

On Aug 11
10 x 2,200 = 22,000
18 x 2,250 = 40,500

How did I calculate that? I just took away 12 units from the aug 1 (top line inventory)

On Aug 22 (again under the inventory column):
17 x 2,250 = 38,250

How did I calculate that (I removed the final 10 units from the first line inventory, plus 1 more from the second line)

[nance101]

Wow! You're a genius! Thank you so much for your collaboration! You have been great BIG help to me! Now I can work the other problems based on this example! God Bless you! And once again, thank you so much!

[CaptainForest]

You're welcome nance