As of January 31, 2020, the ABC Company determined its balance of Merchandise inventory, and recorded the
Question:
As of January 31, 2020, the ABC Company determined its balance of Merchandise inventory, and recorded the entry that (a) Reduced the Merchandise inventory account balance to that amount, and
(b) Recorded Cost of goods sold for the month of January.
The ABC Company uses the LIFO method to cost its inventory. At December 31, 2019, the composition of its Merchandise inventory was:
100,000 units at $4.50 | $ 450,000 |
50,000 units at $5.00 | 250,000 |
150,000 units | $ 700,000 |
A. What was the quantity of ABC Company’s inventory at January 31, 2020? Show your computations.
B What is the dollar value of ABC Company’s inventory at January 31, 2020? Show your computations, including the detailed composition.
C. Record Cost of goods sold for the month ended January 31, 2020. Show your computations of Cost of goods sold.
Here is a list of transactions for Jan 2020
- On January 1, 2020, new stockholders purchased 20,000 newly issued shares of ABC Company’s
$1 par value common stock for $280,000 cash.
- On January 1, 2020, the ABC Company paid its insurance company $60,000 cash for a 12-month comprehensive insurance policy.
- On January 1, 2020, the ABC Company paid its landlord $20,000 cash for store rental for the month of January.
- On January 1, 2020, the ABC Company sold the land that it owned for $20,000 cash and a
$100,000 8% Note receivable. Interest on the 8% Note receivable will be collected on June 30 and December 31. The $100,000 balance of the 8% Note receivable will be collected on December 31, 2021. Interest on this note is computed on the basis of months.
- On January 1, 2020, the ABC Company sold one-fourth of the Store fixtures that it had on hand on December 31, 2019, for $50,000 cash
- On January 1, 2020, the ABC Company purchased additional Store fixtures for a total of$300,000. ABC made a down payment of $50,000 cash and signed an 8% Note payable for the$250,000 balance. The 8% Note payable is due in 2 years on December 31, 2021. Interest on this note is computed on the basis of days and is payable every 6 months on June 30 and December 31.
- During January of 2020, the ABC Company purchased $50,000 of Supplies on account.
- During January of 2020, the ABC Company purchased 500,000 units of Merchandise inventory for $3,000,000 (i.e., $6.00 per unit) on account. ABC Company debits its Merchandise inventory account with purchases.
- During January of 2020, the ABC Company sold 485,000 units to customers for a total of
$5,820,000. $5,400,000 of these sales were for cash, and $420,000 of the sales were on account.
-During January of 2020, the ABC Company collected $556,900 in cash from customers in settlement of part of ABC’s Accounts receivable.
-During January of 2020, the ABC Company paid $3,250,000 in cash to suppliers to settle part of ABC’s Accounts payable.
-During January of 2020, the ABC Company paid a total of $300,000 cash to employees for wages. That included $10,000 for work that was done during the last day of December 2019, and
$290,000 for work done during the first 29 days of January 2020.
During January of 2020, $3,100 of specific Accounts receivable were identified as bad debts and were written off.
During January of 2020, the ABC Company declared and paid a $150,000 cash dividend to its stockholders.
Expert Answer:
