Shepherd Cycles sells a variety of bicycles. The business which uses the FIFO method, began the last quarter of 2013 (October 1 to December 31) with 20 "Iron Man 2" bicycles at a total cost of $122,000. During the quarter, the company completed the following transactions.
October 8 105 bicycles were purchased at a cost of $5,920 each but in addition there was a freight charge of $480 on each bicycle.
October 31 The sales for October were 85 bicycles which yielded total sales revenue of $761,600. ( 15 of these units were sold on account)
November 4 A new batch of 60 bicycles was purchased at a total cost of $408,000
November 10 5 of the bicycles purchased on November 4 were returned to the supplier, as they were defective.
November 30 During the month 57 bicycles were sold at a price of $9,520 each.
December 4 A customer, to whom 9 bicycles were sold during the first business day of November, returned 4 of the cycles. December 10 Owing to an increased demand, a further 115 bicycles were purchased at a cost of $7,600 each; these were subject to a trade discount of 5% each.
December 31 122 bicycles were sold during December at a unit selling price of $10,100.
Prepare a perpetual inventory record for this merchandise, to determine the company's cost of goods sold for the quarter and the value of ending.
Given that selling & distribution and administrative costs for the quarter were $214,940 and$103,760 respectively, prepare an income statement for Shepherd Cycles for the quarter ended December 31, 2013.
Journalize the October transactions, assuming the company uses a: - Periodic inventory system - Perpetual inventory system
December 31 An actual count of inventory was carried out which revealed that there were 28 units of the merchandise in the store room.