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Compute gross profit using the perpetual system

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Reference no: EM131768756

Question - Periodic versus Perpetual Entries

Chippewas Company sells one product. Presented below is information for January for the Chippewas Company.

Jan. 1       Inventory         100 units at $6 each

4                Sale               80 units at $8 each

11             Purchase         150 units at $6.50 each

13             Sale                120 units at $8.75 each

20             Purchase         160 units at $7 each

27             Sale                100 units at $9 each

Chippewas uses the FIFO cost flow assumption. All purchases and sales are on account.

(a) Assume Chippewas uses a periodic system. Prepare all necessary journal entries, including the end-of-month closing entry to record cost of goods sold. A physical count indicates that the ending inventory for January is 110 units.

(b) Compute gross profit using the periodic system.

(c) Assume Chippewas uses a perpetual system. Prepare all necessary journal entries.

(d) Compute gross profit using the perpetual system.

Reference no: EM131768756

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