Question

On May 10, Hudson Computing sold 140 Millennium laptop computers to Apex Publishers. At the date of this sale, Hudson’s perpetual inventory records included the following cost layers for the Millennium laptops.

Purchase Date	Quantity		Unit Cost				Total Cost
Apr. 9	120		$	1,500			$	180,000
May 1	30		$	1,600				48,000
Total on hand	150						$	228,000

Prepare journal entries to record the cost of the 140 Millennium laptops sold on May 10, assuming that Hudson Computing uses the following.

c. FIFO method.

d. LIFO method.

Answer 1

FIFO Method;

Date	Accounts Title & Explanation	Debit	Credit
May 10	Cost of Goods Sold	$212000
	Merchandise Inventory		$212000
	(For recording cost of goods sold)

Working Note;

Cost of goods sold under FIFO, is calculated as follow;

(120 * $1500) + (20 * $1600)

= $180000 + $32000

= $212000

LIFO Method;

Date	Accounts Title & Explanation	Debit	Credit
May 10	Cost of Goods Sold	$213000
	Merchandise Inventory		$213000
	(For recording cost of goods sold)

Working Note;

Cost of goods sold under LIFO, is calculated as follow;

(30 * $1600) + (110 * $1500)

= $48000 + $165000

= $213000