Aldor Corporation opened a new store on January 1, 2014. During 2014, the first year of operations, the following purchases and sales of inventory were made: Purchases Sales Date Units Cost Date Units Price July 4 Dec. 29 $1,000 Jan. 5 June 11 Oct. 18 $2,000 $2,000 10 15 10 1,200 35 15 1,300 Dec. 20 20 1,500 Instructions (a) Calculate the cost of goods available for sale and the number of units of ending inventory. (b) Assume Aldor uses average periodic. Calculate the cost of ending inventory, cost of the goods sold, and gross profit. (c) Assume Aldor uses average perpetual. Calculate the cost of ending inventory, cost of the goods sold, and gross profit. (d) Prepare journal entries to record the December 20 purchase and the December 29 sale using (1) average periodic and (2) average perpetual. (e) Compare the results of parts (b) and (c) above and comment.

Aldor Corporation opened a new store on January 1, 2014. During 2014, the first year of operations, the following purchases and sales of inventory were made: Purchases Sales Date Units Cost Date Units Price July 4 Dec. 29 $1,000 Jan. 5 June 11 Oct. 18 $2,000 $2,000 10 15 10 1,200 35 15 1,300 Dec. 20 20 1,500 Instructions (a) Calculate the cost of goods available for sale and the number of units of ending inventory. (b) Assume Aldor uses average periodic. Calculate the cost of ending inventory, cost of the goods sold, and gross profit. (c) Assume Aldor uses average perpetual. Calculate the cost of ending inventory, cost of the goods sold, and gross profit. (d) Prepare journal entries to record the December 20 purchase and the December 29 sale using (1) average periodic and (2) average perpetual. (e) Compare the results of parts (b) and (c) above and comment.

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter7: Inventories

Section: Chapter Questions

Problem 5PA

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