Accounting and Financial Management: Journal Entries, Inventory

This assignment solution covers journal entries for Lilly Heating & Air Company's transactions, including purchases, returns, and payments, considering trade discounts. It also demonstrates inventory valuation using FIFO and LIFO methods, calculating cost of sales, closing inventory, and gross profit. Furthermore, it analyzes supplier costs, comparing total costs and price per unit from two suppliers to determine the most cost-effective option. Desklib provides this solution and other study resources to aid students in their academic pursuits.

Running head: ACCOUNTIGN AND FINANCIAL MANAGEMENT
Accounting and Financial Management
Name of the Student
Name of the University
Authors Note
Course ID

1ACCOUNTIGN AND FINANCIAL MANAGEMENT
Table of Contents
Answer to question 1..................................................................................................................2
Answer to question 2:.................................................................................................................3
Bibliography:..............................................................................................................................5

2ACCOUNTIGN AND FINANCIAL MANAGEMENT
Answer to question 1:
Journal Entries
In the Books of Lilly Heating and Air Company
Date Particulars Amount Amount
A Purchase A/c …………….Dr
$
36,000
To Schell Co………………….…A/c
$
35,640
To Discount Received …….A/c
$
360
(Being merchandise purchased on account from
Schell Co and received trade discount of 1%)
B Schell Co A/c………………………..Dr
$
35,640
To Cash ……………………………A/c
$
35,640
(Being sum owed to Schell Co paid)
C Accounts Payable Schell Co A/c……………Dr
$
9,000
To Purchase Return
$
9,000
(Being return of merchandise purchased from
Schell Co)
D Purchase A/c…………………………………Dr
$
5,000
To Schell Co ……………………..A/c
$
5,000
(Being merchandise purchased from Schell Co)
E Cash A/c…………………………………….Dr
$
9,000
To Schell Co----------------------A/c
$
9,000
(Being the receipt of purchase return from Schell
Co)
Answer to question 2
Fifo Method
Date Purchase Issued Balance Total
02-Apr 1 units @ 100 1 units @ 100 100

3ACCOUNTIGN AND FINANCIAL MANAGEMENT
15-Apr 1 units @120 1 units @ 100 100
1 units @120 120
20-Apr 1 units @ 140 1 units @ 100 100
1 units @120 120
1 units @ 140 140
27-Apr 1 Units @ 300
1 units @120 120
1 units @ 140 140
260
Lifo Method
Date Purchase Issued Balance Total
02-Apr 1 units @ 100 1 units @ 100 100
15-Apr 1 units @120 1 units @ 100 100
1 units @120 120
20-Apr 1 units @ 140 1 units @ 100 100
1 units @120 120
1 units @ 140 140
27-Apr 1 Units @ 300
1 units @ 100 100
1 units @120 120
220
Average Method
Particulars Fifo Lifo Average Method
Sales
Revenue 300 300 300
Less: Cost of
Sales 320 320 320
Less: Closing
Inventory 260 220 110
Gross Profit 40 80 190

4ACCOUNTIGN AND FINANCIAL MANAGEMENT
Answer to question 3:
Supplier One:
Supplier One
Total Cost 100000 250
Price per Unit 400
400 x (1 - 1%) 396
Freight 0
Total Cost Price 396
Workings note
$100,000 / $400 = 250 Unit
= 400 x (1-1%) = 396
Freight = 0
Total Price per unit = 396 + 0 = 396
Supplier two
Supplier Two
Total Costs 99750 250
Price per Unit 399
399 x (1 - 2%) 391.02
Freight 3.9
Total Cost Price 394.92
Workings Note
Cost Per Unit
= $99750 / $399 = 250 Unit
399 x (1 – 2%) = 391.02

5ACCOUNTIGN AND FINANCIAL MANAGEMENT
Freight per unit
= $975 / $250 = $3.9 per unit
Total Cost = 391.02 + 3.9 per unit
= 391.02 + 3.9 =
394.92 price per unit

6ACCOUNTIGN AND FINANCIAL MANAGEMENT
Bibliography:
Drury, C.M., 2013. Management and cost accounting. Springer.
Eldenburg, L.G., Wolcott, S.K., Chen, L.H. and Cook, G., 2016. Cost management:
Measuring, monitoring, and motivating performance. Wiley Global Education.