Question: Fong Sai-Yuk Company sells one product. Presented below is information for January for Fong Sai-Yuk Company.

Jan. 1 Inventory 100 units at \(5 each

4 Sale 80 units at \)8 each

11 Purchase 150 units at \(6 each

13 Sale 120 units at \)8.75 each

20 Purchase 160 units at \(7 each

27 Sale 100 units at \)9 each

Fong Sai-Yuk uses the FIFO cost flow assumption. All purchases and sales are on account.

Instructions

(a) Assume Fong Sai-Yuk 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 Fong Sai-Yuk uses a perpetual system. Prepare all necessary journal entries.

(d) Compute gross profit using the perpetual system.

Date

Description

Debit

Credit

Jan 4

Accounts Receivables

$640

Sales Revenue

$640

(Being goods sold)

Jan 11

Purchase A/c

$900

Accounts Payable

$900

(Being goods purchased on credit)

Jan 13

Accounts Receivables

$1050

Sales Revenue

$1050

(Being goods sold on credit)

Jan 20

Purchase A/c

$1120

Accounts Payable

$1120

(Being goods purchased on credit)

Jan 27

Accounts Receivables

$900

Sales Revenue

$900

(Being goods sold on credit)

Jan 31

Inventory A/c (ending)

$770

Cost of goods sold

$1750

Purchase A/c

$2020

Inventory A/c (beginning)

$500

Date

Description

Debit

Credit

Jan 4

Accounts Receivables

$640

Sales Revenue

$640

(Being goods sold)

Jan 4

Cost of goods sold

$400

Inventory

$400

(Being cost of goods sold recorded)

Jan 11

Purchase A/c

$900

Accounts Payable

$900

(Being goods purchased on credit)

Jan 13

Accounts Receivables

$1050

Sales Revenue

$1050

(Being goods sold on credit)

Jan 13

Cost of goods sold

$700

Inventory A/c

$700

(Being cost of goods sold recorded)

Jan 20

Purchase A/c

$1120

Accounts Payable

$1120

(Being goods purchased on credit)

Jan 27

Accounts Receivables

$900

Sales Revenue

$900

(Being goods sold on credit)

Jan 27

Cost of goods sold

$650

Inventory A/c

$650

(Being cost of goods sold recorded)