Question

Required information The following information applies to the questions displayed below Pam's Creations had the following sales and purchase transactions during Year 2. Beginning inventory consisted of 130 items at Sleach. The company uses the FIFO cost flow assumption and keeps perpetual inventory records Required a. Record the inventory transactions in general journal format required in the first account field.) ne entry is required for a transaction event, select "Ne journal entry General Journal Det Credit Date 03/05 101010 Inventory Cash 10010 04/10 Cash Sales revenue 04/10 Cost of goods sold Inventory 06/19 Cash Sales revenue 05/19 Cost of goods sold Inventory 09/16 Inventory Cash 11/28 Cash Sales revenue 11/28 Cost of goods sold Inventory b. Calculate the gross margin Pam's Creations would report on the Year 2 income statement. (Amounts to be deducted should be indicated with a minus sign.) This is a numeric cell, so please enter numbers only c. Determine the ending inventory balance Pam's Creations would report on the December 31, Year 2. balance sheet Ending inventory This is a numeric cell, so

Answer 1

a)

Calculation of cost of goods sold andclosing inventory under FIFO (Perpetual)
TransactionType					Cost of goods sold			Closing inventory
Date	Particulars	Qty	Rate	Amount($)	Qty	Rate	Amount($)	Qty	Rate	Amount($)
01-Jan	Beginning   inventory	130	81	10,530				130	81	10,530
05-Mar	purchase	110	91	10,010				130	81	10,530
								110	91	10,010
10-Apr	sale				75	81	6,075	55	81	4,455
								110	91	10,010
19-Jun	sale				55	81	4,455	40	91	3,640
					70	91	6,370
16-Sep	purchase	60	96	5,760				40	91	3,640
								60	96	5,760
28-Nov	sale				40	91	12,190	35	96	3,360
					25	96	2,775
Total / Balance		300		26,300	265		31,865	35		3,360.00

Date	Account   Titles and Explanation	Debit	Credit
Mar.   5	Merchandise   Inventory	10,010
	Accounts Payable		10,010
Apr.   10	Accounts Receivable/Cash	13275
	Sales Revenue		13275
Apr.   10	Cost of goods sold	6,075
	Merchandise inventory		6,075
June   19	Accounts Receivable/Cash	22125
	Sales Revenue		22125
June   19	Cost of goods sold	10,825
	Merchandise inventory		10,825
Sept.   16	Merchandise   Inventory	5,760
	Accounts Payable		5,760
Nov.   28	Accounts Receivable	11830
	Sales Revenue		11830
Nov.   28	Cost of goods sold	14,965
	Merchandise inventory		14,965

b)Gross Margin = 47,230 - 31,865

=15,365

c)Ending Inventory = 35 Units Value of $ 3,360