Question

Burr Industries has the following events transpire in June of 2020 (some as in Part I)"...

Burr Industries has the following events transpire in June of 2020 (some as in Part I)" Event Details Buy Inventory Buy 6,000 units of inventory for $6/unit on credit. Sell Inventory Sell 4,765 units of inventory for $44/unit on credit. Close Books Books are closed for the month of June. Additional Info: Inventory is always purchased for $6/unit. Beginning inventory is 1,840 units. Assuming Burr uses the Perpetual Inventory System, please provide the necessary journal entries. If no entry is required, please put “N/A”

**You may round your answers to the nearest dollar.

(A) Please provide the journal entry for the purchase of inventory:

(B) Please provide the journal entry for the sale of inventory:

(C) Please provide the journal entry which Burr would record when closing its books/the adjusting entry relating to inventory:

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Homework Answers

Answer #1

A) Purchase of inventory

Purchase A/C Dr. $36,000
To Accounts Payable A/C $36,000

Purchase = 6000 units × 6/unit = $36,000

B) Sale of inventory

Accounts Receivable A/C Dr. $2,09,660
To Sales A/C $2,09,660

Sales = 4,765 units × 44/unit = $2,09,660

C) Closing adjusting entry for inventory

Closing inventory A/C Dr. $18,450
To Income Summary A/C $18,450

Closing inventory

Beginning inventory = 1,840 units

Add: Purchases = 6,000 units

Less: Sales = 4,765 units

Closing inventory in units = 3,075 units

Value of closing inventory = 3,075 × 6 = $18,450

(Inventory is always purchased for $6/unit)

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