A company that uses perpetual inventory system made the following cash purchases and sales:

January 1 Purchased 100 units at $10 per unit.
February 5: Purchased 60 units at $12 per unit.
March 16: Sold 40 units for $16 per unit.
Prepare general journal entries to reord the March 16 sales assuming a FIFO method is used

To prepare the general journal entries for the March 16 sales using the First-In, First-Out (FIFO) method, we need to determine the cost of the units sold based on the order in which they were purchased.

First, let's calculate the cost of the remaining inventory as of March 16 using the FIFO method:

1. Starting inventory (January 1 purchase): 100 units purchased at $10 per unit.
Total cost of starting inventory = 100 units * $10 per unit = $1000.

2. February 5 purchase: 60 units purchased at $12 per unit.
Total cost of February 5 purchase = 60 units * $12 per unit = $720.

Cost of remaining inventory as of March 16:
Remaining inventory = Starting inventory + February 5 purchase
= $1000 + $720
= $1720.

Next, let's calculate the cost of goods sold (COGS) for the March 16 sales:

1. March 16 sales: 40 units sold at $16 per unit.
COGS = Units sold * Cost per unit
= 40 units * Cost per unit (based on FIFO).

Now, let's calculate the cost of each unit for the COGS using FIFO:

1. The first 100 units purchased on January 1 are assumed to be sold first.
Cost per unit for the first 100 units = $10 per unit.

2. The remaining 40 units sold are from the February 5 purchase.
Cost per unit for the next 40 units = $12 per unit.

Now, we can calculate the COGS for the March 16 sales:

COGS = (Units sold from January 1 purchase * Cost per unit) + (Units sold from February 5 purchase * Cost per unit)
= (40 units * $10 per unit) + (40 units * $12 per unit)
= $400 + $480
= $880.

Finally, we can prepare the journal entry to record the March 16 sales:

Date Account Debit Credit
------------------------------------------------------------------------
March 16 Accounts Receivable $640 (40 units * $16)
Sales Revenue $640
COGS $880
Inventory $880

In this journal entry, the Accounts Receivable account is credited for the sales amount, the Sales Revenue account is debited for the same amount, and the COGS account is debited for the cost of goods sold ($880), while the Inventory account is credited for the same amount to reduce the value of remaining inventory.