Question : 15) FILLO, Inc.’s inventory activity in May 2011 was as : 1253249

 

15) FILLO, Inc.’s inventory activity in May 2011 was as follows:

Inventory, May 1

100 units @ $8 each

Purchase, May 7

300 units @ $6 each

Sale, May 18

250 units @ $15 each

 

Part A: Record the effect of the above inventory activity on the accounting equation assuming perpetual weighted average cost is used.

Shareholders’ equity

 

Transactions in May, 2011:

Assets

Liabilities

CC

Retained earnings

5/1

Beginning inventory: FILLO, Inc. still owes for the 100 units @ $8.

800 Inventory

800 Accounts

Payable

 

 

5/7

Purchased 300 units @ $6 each on account

 

 

 

 

5/18

Sold 250 units for $15 each to customers on account. Record the 1) sale and 2) cost of the sale.

 

 

 

 

 

Part B: Record the effect of the above inventory activity on the accounting equation assuming perpetual first-in, first-out (FIFO) is used.

Shareholders’ equity

 

Transactions in May, 2011:

Assets

Liabilities

CC

Retained earnings

5/1

Beginning inventory: FILLO, Inc. still owes for the 100 units @ $8.

800 Inventory

800 Accounts

Payable

 

 

5/7

Purchased 300 nits @ $6 each on account.

 

 

 

 

5/18

Sold 250 units for $15 each to customers on account. Record the 1) sale and 2) cost of the sale.

 

 

 

 

 

Part C: Using the information from Parts A and B above, for each item, write in the amount (even if $0) as of or for the Month Ended May 31, 2011. Write in the one financial statement where the line item is found.

 

Amount

Financial Statement

 

WA

FIFO

 

1.

Inventory

 

 

 

2.

Cost of goods sold

 

 

 

3.

Gross profit

 

 

 

4.

Sales

 

 

 

5.

Accounts receivable

 

 

 

6.

Accounts payable

 

 

 

 

 

 

16) Divide the class into teams of three or four people. Each team member should work the following problem separately outside of class. Then give the students time in class to compare answers with their teammates and put together a final, correct copy of the problem. Each team should turn in only one copy of the problem for grading. All team members will receive the same grade.

 

Phillo, Inc. had the following sales and purchases during its first month of business.

 

Part A: Record the effect of the following transactions on the accounting equation, assuming a LIFO perpetual inventory system. Fill in both the correct dollar amounts and account titles. Use a plus for increases and a minus for decreases.

Shareholders’ equity

 

Transactions in May, 2011:

Assets

Liabilities

CC

Retained earnings

5/3

Purchased 30 units at $11 each on account

 

 

 

 

5/10

Sold 25 units for $15 each to a customer on accounts.

 

 

 

 

5/15

Purchased 20 units at $10 each on account.

 

 

 

 

5/18

Collected its accounts receivable.

 

 

 

 

5/23

Paid half of its accounts payable.

 

 

 

 

5/29

Sold 15 units for $15 each to a customer on account.

 

 

 

 

 

Part B: Record the effect of the following transactions on the accounting equation assuming a FIFO perpetual inventory system. Fill in both the correct dollar amounts and account titles. Use a plus for increases and a minus for decreases.

Shareholders’ equity

 

Transactions in May, 2011:

Assets

Liabilities

CC

Retained earnings

5/3

Purchased 30 units at $11 each on account

 

 

 

 

5/10

Sold 25 units for $15 each to a customer on accounts.

 

 

 

 

5/15

Purchased 20 units at $10 each on account.

 

 

 

 

5/18

Collected its accounts receivable.

 

 

 

 

5/23

Paid half of its accounts payable.

 

 

 

 

5/29

Sold 15 units for $15 each to a customer on account.

 

 

 

 

 

Part C: Put an X in the appropriate box to select the method that gives the result shown by choosing either LIFO, FIFO, or Same (if both methods result in the same amount).

 

 

Which method results in the:

WA

FIFO

Same

1

higher net income?

 

 

 

2

lower taxes?

 

 

 

3

higher current assets?

 

 

 

4

higher Cash paid to suppliers on the Statement of Cash Flows?

 

 

 

5

higher Accounts payable on the Balance Sheet?