Inventory Flow Assumptions
the Perpetual Inventory Records of Handy Hardware

Essay

Inventory flow assumptions
The perpetual inventory records of Handy Hardware show 150 units of a particular product on hand, acquired at the following dates and costs:
$$\begin{array} { | l | r | r | r | } \hline \text { Purchase Date } & \text { Quantity } & \text { Unit Cost (\$) } & \text { Total Cost (\$) } \\\hline \text { 10 May } & 50 & 85 & 4,250 \\\hline \text { 1 June } & \underline { 100 } & 100 & \underline { 10,000 } \\\hline \text { Total on harnd } & 150 & & 14,250 \\\hline\end{array}$$ On 3 June, Handy sold 120 units of this product.
Instructions: Prepare a journal entry to record the cost of goods sold relating to the sale on 3 June, assuming that Handy uses:
(a) A FIFO flow assumption.
(b) The weighted average cost (or moving average) flow assumption.