Question

The beginning inventory at Funky Party Supplies and data onpurchases and sales for a three-month period ending March 31, 2016,are as follows:

Date		Transaction	Number of Units	PerUnit	Total
Jan.	1	Inventory	2,500	$60.00	$150,000
	10	Purchase	7,500	68.00	510,000
	28	Sale	3,750	120.00	450,000
	30	Sale	1,250	120.00	150,000
Feb.	5	Sale	500	120.00	60,000
	10	Purchase	18,000	70.00	1,260,000
	16	Sale	9,000	125.00	1,125,000
	28	Sale	8,500	125.00	1,062,500
Mar.	5	Purchase	15,000	71.60	1,074,000
	14	Sale	10,000	125.00	1,250,000
	25	Purchase	2,500	72.00	180,000
	30	Sale	8,750	125.00	1,093,750

	Instructions
1.	Record the inventory,purchases, and cost of merchandise sold data in a perpetualinventory record similar to the one illustrated in Exhibit 4, usingthe first-in, first-out method.
2.	Determine the total sales andthe total cost of merchandise sold for the period. Journalize theentries in the sales and cost of merchandise sold accounts. Assumethat all sales were on account and date your journal entry March31. Refer to the Chart of Accounts for exact wording of accounttitles.
3.	Determine the gross profit fromsales for the period.
4.	Determine the ending inventorycost as of March 31, 2016.
5.	Based upon the preceding data,would you expect the inventory using the last-in, first-out methodto be higher or lower?

2. Determine the total sales and the total cost of merchandisesold for the period. Journalize the entries in the sales and costof merchandise sold accounts. Assume that all sales were on accountand date your journal entry March 31. Refer to the Chart ofAccounts for exact wording of account titles.

CHARTOF ACCOUNTS

FunkyParty Supplies

General Ledger

	ASSETS
110	Cash
111	Petty Cash
120	Accounts Receivable
131	Notes Receivable
132	Interest Receivable
141	Merchandise Inventory
145	Office Supplies
146	Store Supplies
151	Prepaid Insurance
181	Land
191	Office Equipment
192	Accumulated Depreciation-OfficeEquipment
193	Store Equipment
194	Accumulated Depreciation-StoreEquipment

	LIABILITIES
210	Accounts Payable
221	Notes Payable
222	Interest Payable
231	Salaries Payable
241	Sales Tax Payable

	EQUITY
310	Common Stock
311	Retained Earnings
312	Dividends
313	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

EXPENSES

510

Cost of Merchandise Sold

515

Credit Card Expense

516

Cash Short and Over

520

Salaries Expense

531

Advertising Expense

532

Delivery Expense

533

Insurance Expense

534

Office Supplies Expense

535

Rent Expense

536

Repairs Expense

537

Selling Expenses

538

Store Supplies Expense

561

Depreciation Expense-OfficeEquipment

562

Depreciation Expense-StoreEquipment

590

Miscellaneous Expense

710

Interest Expense

The beginning inventory at Funky Party Supplies and data onpurchases and sales for a three-month period ending March 31, 2016,are as follows:

Date		Transaction	Number of Units	PerUnit	Total
Jan.	1	Inventory	2,500	$60.00	$150,000
	10	Purchase	7,500	68.00	510,000
	28	Sale	3,750	120.00	450,000
	30	Sale	1,250	120.00	150,000
Feb.	5	Sale	500	120.00	60,000
	10	Purchase	18,000	70.00	1,260,000
	16	Sale	9,000	125.00	1,125,000
	28	Sale	8,500	125.00	1,062,500
Mar.	5	Purchase	15,000	71.60	1,074,000
	14	Sale	10,000	125.00	1,250,000
	25	Purchase	2,500	72.00	180,000
	30	Sale	8,750	125.00	1,093,750

	Instructions
1.	Record the inventory,purchases, and cost of merchandise sold data in a perpetualinventory record similar to the one illustrated in Exhibit 4, usingthe first-in, first-out method.
2.	Determine the total sales andthe total cost of merchandise sold for the period. Journalize theentries in the sales and cost of merchandise sold accounts. Assumethat all sales were on account and date your journal entry March31. Refer to the Chart of Accounts for exact wording of accounttitles.
3.	Determine the gross profit fromsales for the period.
4.	Determine the ending inventorycost as of March 31, 2016.
5.	Based upon the preceding data,would you expect the inventory using the last-in, first-out methodto be higher or lower?

X

FIFO

1. Record the inventory, purchases, and cost of merchandise solddata in a perpetual inventory record similar to the one illustratedin Exhibit 4, using the first-in, first-out method.

Date	Purchases			Cost of MerchandiseSold			Inventory
2016	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
Jan. 1
10
10
28
28
30
Feb. 5
10
10
16
16
28
Mar. 5
5
14
14
25
25
30
30
31	Balances

PAGE 10

JOURNAL

	DATE	DESCRIPTION	POST.REF.	DEBIT	CREDIT
1
2
3
4