Reference no: EM132695868
Stiller Company maintains perpetual inventory records on a FIFO basis for the three main products distributed by the company. A physical inventory is taken at each year-end to check the perpetual inventory records. The following information relates to one of its products for the month ended June 2020.
Date Units Unit Cost
June 1 Beginning inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000 $8.10
Purchases and sales (in order)
June 3 Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 8.15
June 4 Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
June 8 Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000 8.20
June 9 Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,000
June 15 Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 8.40
June 18 Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000 8.25
June 20 Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,000
June 29 Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 8.10
June 30 Ending inventory (per count) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,500
Required
Question a. Reconstruct the perpetual inventory record for this product.
Question b. Prepare eight journal entries (in chronological order) for the above five purchases and three sales. Assume that the selling price is $22 per unit. Also create a journal entry for any inventory shortage.
Question c. Prepare the income statement ending with gross margin. Compute the gross profit as a percentage of sales from this income statement.