Question

Marigold Skateshop Ltd. reports the following inventory transactions for its skateboards for the month of April. The company uses the perpetual inventory system. Date Explanation Units Unit Cost Total Cost Apr. 1 Beginning inventory 30 $52 $1,560 6 Purchases 15 41 615 9 Sales (35 ) 14 Purchases 20 37 740 20 Sales (25 ) 28 Purchases 20 33 660

Determine the cost of goods sold and cost of ending inventory using average cost. (Round answers to 2 decimal places, e.g. 1.25.) Cost of Goods Sold $ Cost of Ending Inventory $

When the company counted its inventory at the end of April, it counted only 24 skateboards on hand. What journal entry, if any, should the company make to record this shortage? (Credit account titles are automatically indented when the amount is entered. Do not indent manually and Round answers to 2 decimal places, e.g. 1.25. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit

If the company had not discovered this shortage, identify what accounts would be overstated or understated and by what amount. (Round answers to 2 decimal places, e.g. 1.25.) Merchandise Inventory OverstatedUnderstated $ Cost of Goods Sold UnderstatedOverstated $ Retained Earnings OverstatedUnderstated $

Answer 1

Weighted Average
Date	Particulars	Units	Cost	Amount
Apr 01	Beginning Inventory	30.00	52.00	1,560.00
Apr 06	Purchases	15.00	41.00	615.00
	Total	45.00	48.33	2,175.00
Apr 09	COGS	35.00	48.33	1,691.67
	Total	10.00	48.33	483.33
Apr 14	Purchases	20.00	37.00	740.00
	Total	30.00	40.78	1,223.33
Apr 20	COGS	25.00	40.78	1,019.44
	Total	5.00	40.78	203.89
Apr 28	Purchases	20.00	33.00	660.00
	Ending Inventory	25.00	34.56	863.89
Cost of Goods Sold	2,711.11
Cost of Ending Inventory	863.89
	Debit	Credit
Cost of goods sold Dr	34.56
To Merchandise inventory		34.56
Merchandise Inventory	Overstated
Cost of Goods Sold	Understated
Retained Earnings	Overstated