During June, the receipts and issuances of Material No. A2FO are as follows:
Received
June 3 1,100 units @ $15
16 1,700 units@ $17
29 900 units@ $18
Issued
June 11 700 units 4 Job No. 116
18 1,900 units 4 Job No.117
30 800 units 4 Job No. 118
A) Determine the cost of each of the three issued under a perpetual system, using the first-in, first-out method
B)Present the journal entry to record the issuance of the materials for the month, assumingthat the cost of issuances is determined by the first-in first-out method.
12
15
16
To determine the cost of each of the three issuances under a perpetual system using the first-in, first-out (FIFO) method, follow these steps:
Step 1: Calculate the total cost of inventory after each receipt.
Receipt 1: 1,100 units @ $15
Total cost: 1,100 * $15 = $16,500
Receipt 2: 1,700 units @ $17
Total cost: $16,500 + (1,700 * $17) = $46,100
Receipt 3: 900 units @ $18
Total cost: $46,100 + (900 * $18) = $61,400
Step 2: Determine the cost of each issuance using the FIFO method.
Issuance 1: 700 units for Job No. 116 (June 11)
Cost per unit: Since the inventory is issued based on FIFO, we use the earliest receipt first. The first receipt was on June 3, with a cost of $15 per unit. Therefore, the cost of 700 units will be 700 * $15 = $10,500.
Issuance 2: 1,900 units for Job No. 117 (June 18)
Cost per unit: The previous inventory balance after the first issuance (June 11) is $61,400. So the remaining units are from the second receipt on June 16, with a cost of $17 per unit. Therefore, the cost of 1,900 units will be 1,900 * $17 = $32,300.
Issuance 3: 800 units for Job No. 118 (June 30)
Cost per unit: The previous inventory balance after the second issuance (June 18) is $93,700. So the remaining units are from the third receipt on June 29, with a cost of $18 per unit. Therefore, the cost of 800 units will be 800 * $18 = $14,400.
Therefore, the cost of each issuance under a perpetual system using the FIFO method is:
- Issuance 1 (Job No. 116): $10,500
- Issuance 2 (Job No. 117): $32,300
- Issuance 3 (Job No. 118): $14,400
To present the journal entry to record the issuance of the materials for the month, assuming the cost of issuances is determined by the FIFO method, follow these steps:
Step 1: Identify the accounts involved in the journal entry:
- Debit: Work in Process (Job No. 116, Job No. 117, Job No. 118)
- Credit: Materials Inventory
Step 2: Determine the amounts for each account:
- Debit: Work in Process (Job No. 116): $10,500
- Debit: Work in Process (Job No. 117): $32,300
- Debit: Work in Process (Job No. 118): $14,400
- Credit: Materials Inventory: $57,200 ($10,500 + $32,300 + $14,400)
Step 3: Record the journal entry:
Date Account Debit Credit
-------------------------------------------------------------
June 11 Work in Process $10,500
June 18 Work in Process $32,300
June 30 Work in Process $14,400
Materials Inventory $57,200
Please note that the journal entry provided assumes there are no other transactions or accounts affected in this scenario.