Tomas Inc. sells product A and uses a periodic inventory system. Simplified information about product A...

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Tomas Inc. sells product A and uses a periodic inventory system. Simplified information about product A for the year 2014 is given in the following table. The company's fiscal year ends on Dec 31, 2014. Transactions (a) Inventory, Dec 31, 2013 For the year 2014: (b) Purchase, March 21 (c) Sale, June 20 ($29 each) (d) Purchase, Aug 19 (e) Sale, Nov 20 ($31 each) Required: immmmmm Units 7,000 units 19,000 units 10,000 units 8,000 units 16,000 units Unit Cost $8 9 11 1. Prepare the journal entries to record transaction (b) and (c), assuming that both (b) and (c) are cash transactions. 2. Compute the cost of ending inventory and cost of goods sold, assuming the company uses the Weighted Average cost flow assumption. 3. Would Tomas's gross profit increase or decrease if it uses the FIFO cost flow assumption instead of Weighted Average? You simply need to indicate the direction of the change in gross profit. No calculations are required. Tomas Inc. sells product A and uses a periodic inventory system. Simplified information about product A for the year 2014 is given in the following table. The company's fiscal year ends on Dec 31, 2014. Transactions (a) Inventory, Dec 31, 2013 For the year 2014: (b) Purchase, March 21 (c) Sale, June 20 ($29 each) (d) Purchase, Aug 19 (e) Sale, Nov 20 ($31 each) Required: immmmmm Units 7,000 units 19,000 units 10,000 units 8,000 units 16,000 units Unit Cost $8 9 11 1. Prepare the journal entries to record transaction (b) and (c), assuming that both (b) and (c) are cash transactions. 2. Compute the cost of ending inventory and cost of goods sold, assuming the company uses the Weighted Average cost flow assumption. 3. Would Tomas's gross profit increase or decrease if it uses the FIFO cost flow assumption instead of Weighted Average? You simply need to indicate the direction of the change in gross profit. No calculations are required.

Answer rating: 100% (QA)

1 Journal entries for transaction b and c b Purchase of 19000 units on March 21 Dr Inventory 171000 ... View the full answer