Reference no: EM132473121
Problem - Periodic versus Perpetual Entries
Chippewas Company sells one product. Presented below is information for January for Chippewas Company.
Jan. 1 Inventory 100 units at $6 each
Jan. 4 Sale 80 units at $8 each
Jan. 11 Purchase 150 units at $6.50 each
Jan. 13 Sale 120 units at $8.75 each
Jan. 20 Purchase 160 units at $7 each
Jan. 27 Sale 100 units at $9 each
Chippewas uses the FIFO cost flow assumption. All purchases and sales are on account.
Required -
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.