current-assets-part-ii

The following table reveals the only the amounts

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Unformatted text preview: peeling away of the most recent purchase layers. The journal entries are not repeated here for the LIFO approach. Do note, however, that the accounts would be the same (as with FIFO); only the amounts would change. Download free ebooks at bookboon.com 35 Perpetual Inventory Systems Current Assets: Part II Date Purchases Sales Cost of Goods Sold 1-Jan 5-Mar 4,000 X $12 = $ 48,000 4,000 X $12 = $ 48,000 6,000 X $16 = $ 96,000 $144,000 6,000 X $16 = $ 96,000 17-Apr 7-Sep Balance 7,000 X $22 = $154,000 6,000 X $16 = $ 6,000 1,000 X $12 = $ 12,000 $108,000 3,000 X $12 = $ 36,000 8,000 X $17 = $136,000 $172,000 8,000 X $17 = $136,000 11-Nov 3,000 X $12 = $ 36,000 6,000 X $25 = $150,000 6,000 X $17 = $102,000 31-Dec 3,000 X $12 = $ 36,000 2,000 X $17 = $ 34,000 $ 70,000 3,000 X $12 = $ 36,000 2,000 X $17 = $ 34,000 $ 70,000 ACCOUNT: Inventory Date Description Jan. 1, 20XX Purchase transaction Apr. 17, 20XX Sale transaction Sept. 7, 20XX Purchase transaction Nov. 11, 20XX Sale transaction Credit Balance forward Mar. 5, 20XX Debit Balance G ONZALES CHEMICAL COMPANY Income Statement For the Year Ending December 31, 20XX $ 48,000 $ 96,000 144,000 $108,000 36,000 136,000 172,000 102,000 Net sales Cost of goods sold Gross profit Expenses 70,000 $304,000 210,000 $ 94,000 ACCOUNT: Sales Date Description Debit Credit Balance Jan. 1, 20XX Balance forward Apr. 17, 20XX Sale transaction $154,000 $ 154,000 - Nov. 11, 20XX Sale transaction 150,000 304,000 G ONZALES CHEMICAL COMPANY Balance Sheet December 31, 20XX Assets ... ACCOUNT: Cost of goods sold Date Description Debit Credit I nventory Balance Jan. 1, 20XX Balance forward Apr. 17, 20XX Sale transaction $108,000 $ 108,000 Nov. 11, 20XX Sale transaction 102,000 70,000 210,000 Download free ebooks at bookboon.com 36 Perpetual Inventory Systems Current Assets: Part II 7.4 Moving Average The average method can also be applied on a perpetual basis, earning it the name “moving average” approach. This technique is considerably more involved, as a new average $144,000/10,000 units unit cost must be computed with each $14.40 per unit purchase transaction. For the last time, $179,200/11,000 units we will look at the Gonzales Chemical $16.2909 per unit Company data: Date Purchases Sales Cost of Goods Sold 1-Jan 5-Mar 4,000 X $12 = $ 48,000 4,000 X $12 = $ 48,000 6,000 X $16 = $ 96,000 $144,000 6,000 X $16 = $ 96,000 17-Apr 7-Sep Balance 7,000 X $22 = $154,000 7,000 X $14.40 = $100,800 3,000 X $14.40 = $ 43,200 8,000 X $17 = $136,000 $179,200 8,000 X $17 = $136,000 **** 11-Nov 3,000 X $14.40 = $ 43,200 6,000 X $25 = $150,000 6,000 X $16.2909 = $97,745 31-Dec 5,000 X $16.2909 = $ 81,455 5,000 X $16.2909 = $ 81,455 The resulting financial data using the moving-average approach are: With us you can shape the future. Every single day. Please click the advert *** For more information go to: www.eon-career.com Your energy shapes the future. As with the periodic system, observe that the perpetual system produced the lowest gross profit via LIFO, the highest with...
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