Question

Boodja-Dooga Ltd balances its accounts at month-end, using special journals, and the perpetual inventory system with the FIFO cost flow assumption. All purchases and sales of inventory are made on credit. The end of the reporting period is June 30. All transactions include GST.  Sales and purchases of product JINX-87 in May 2019 were as follows.

Date	Transaction	No.	Unit cost
May  1 May  7 May 11 May 17 May 21 May 24 May 29	Inventory on hand Purchase (GST inclusive) Sale @ $77.00 per unit (GST Inclusive) Purchase (GST Inclusive) Purchase return (GST Inclusive) Sale @ $39.60 per unit (GST Inclusive) Sale return (on May 24 sale)	50 20 54 30 10 30 8	$20.00 $24.20 $26.40 $24.20

Requirements:

1. For product JINX-87, calculate May 2019’s cost of sales and cost of inventory on hand on as at May 31, 2019.
2. Prepare any journal entries required on June 30, 2019, to correct any errors and to adjust the inventory account. Refer to the provided Chart of Accounts for the appropriate account names.

Part A:

For product JINX-87, calculate May 2019’s cost of sales and cost of inventory on hand as at May 31, 2019

Answer 1

Calculation of cost of sales and cost of inventory on hand on as at May 31, 2019 under FIFO Method

Date	Particulars	Purchases			Issue			Balance
		Quantity	Rate	Amount	Quantity	Rate	Amount	Quantity	Rate	Amount
May 1	Opening Balance	-	-	-	-	-	-	50	20	1,000
May 7	Purchases	20	24.20	484	-	-	-	70		1484
May 11	Sales	-	-	-	54	50 units = 20 per unit 4 units = 24.20 per unit	(1000 + 96.8) = 1096.8	16	24.20	387.2
May 17	Purchases	30	24.20	726	-	-	-	46		1113.2
May 21	Purchase Return	-	-	-	10	24.20	242	36		871.2
May 24	Sales	-	-	-	30	24.20	726	6	24.20	145.2
May 29	Sales Return	8	24.20	193.6	-	-	-	14	24.20	338.8