Question

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Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.

Date

Activities

Units Acquired at Cost

Units Sold at Retail

Mar.

1

Beginning inventory

150

units

@ $52.00 per unit

Mar.

5

Purchase

250

units

@ $57.00 per unit

Mar.

9

Sales

310

units

@ $87.00 per unit

Mar.

18

Purchase

110

units

@ $62.00 per unit

Mar.

25

Purchase

200

units

@ $64.00 per unit

Mar.

29

Sales

180

units

@ $97.00 per unit

Totals

710

units

490

units

4. Compute gross profit earned by the company for each of the four costing methods. For specific identification, the March 9 sale consisted of 90 units from beginning inventory and 220 units from the March 5 purchase; the March 29 sale consisted of 70 units from the March 18 purchase and 110 units from the March 25 purchase. (Round weighted average cost per unit to two decimals and final answers to nearest whole dollar.)

Answer 1

Solution 4:

Computation of ending inventory COGS under FIFO - Warnerwoods Co
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-Mar	150	$52.00	$7,800.00	0	$0.00	$0.00	0	$0.00	$0.00	150	$52.00	$7,800.00
5-Mar	150	$52.00	$7,800.00	250	$57.00	$14,250.00	0	$0.00	$0.00	150	$52.00	$7,800.00
										250	$57.00	$14,250.00
9-Mar	150	$52.00	$7,800.00	0	$0.00	$0.00	150	$52.00	$7,800.00	90	$57.00	$5,130.00
	250	$57.00	$14,250.00				160	$57.00	$9,120.00
18-Mar	90	$57.00	$5,130.00	110	$62.00	$6,820.00	0	$0.00	$0.00	90	$57.00	$5,130.00
										110	$62.00	$6,820.00
25-Mar	90	$57.00	$5,130.00	200	$64.00	$12,800.00	0	$0.00	$0.00	90	$57.00	$5,130.00
	110	$62.00	$6,820.00							110	$62.00	$6,820.00
										200	$64.00	$12,800.00
29-Mar	90	$57.00	$5,130.00	0	$0.00	$0.00	90	$57.00	$5,130.00	20	$62.00	$1,240.00
	110	$62.00	$6,820.00				90	$62.00	$5,580.00	200	$64.00	$12,800.00
	200	$64.00	$12,800.00
Total							490		$27,630.00	220		$14,040.00

Computation of ending inventory COGS under LIFO - Warnerwoods Co
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-Mar	150	$52.00	$7,800.00	0	$0.00	$0.00	0	$0.00	$0.00	150	$52.00	$7,800.00
5-Mar	150	$52.00	$7,800.00	250	$57.00	$14,250.00	0	$0.00	$0.00	150	$52.00	$7,800.00
										250	$57.00	$14,250.00
9-Mar	150	$52.00	$7,800.00	0	$0.00	$0.00	250	$57.00	$14,250.00	90	$52.00	$4,680.00
	250	$57.00	$14,250.00				60	$52.00	$3,120.00
18-Mar	90	$52.00	$4,680.00	110	$62.00	$6,820.00	0	$0.00	$0.00	90	$52.00	$4,680.00
										110	$62.00	$6,820.00
25-Mar	90	$52.00	$4,680.00	200	$64.00	$12,800.00	0	$0.00	$0.00	90	$52.00	$4,680.00
	110	$62.00	$6,820.00							110	$62.00	$6,820.00
										200	$64.00	$12,800.00
29-Mar	90	$52.00	$4,680.00	0	$0.00	$0.00	180	$64.00	$11,520.00	90	$52.00	$4,680.00
	110	$62.00	$6,820.00							110	$62.00	$6,820.00
	200	$64.00	$12,800.00							20	$64.00	$1,280.00
Total							490		$28,890.00	220		$12,780.00

Computation of ending inventory COGS under Weighted Average Cost - Warnerwoods Company
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-Mar	150	$52.00	$7,800	0	$0.00	$0	0	$0.00	$0	150	$52.00	$7,800
5-Mar	150	$52.00	$7,800	250	$57.00	$14,250	0	$0.00	$0	400	$55.13	$22,050
9-Mar	400	$55.13	$22,050	0	$0.00	$0	310	$55.13	$17,089	90	$55.13	$4,961
18-Mar	90	$55.13	$4,961	110	$62.00	$6,820	0	$0.00	$0	200	$58.91	$11,781
25-Mar	200	$58.91	$11,781	200	$64.00	$12,800	0	$0.00	$0	400	$61.45	$24,581
29-Mar	400	$61.45	$24,581	0	$0.00	$0	180	$61.45	$11,062	220	$61.45	$13,520
Total							490		$28,150	220		$13,520

Computation of Gross Profit
Particulars	FIFO	LIFO	Weighted Average	Specific Identification
Sales	$44,430	$44,430	$44,430	$44,430
Cost of goods sold	$27,630	$28,890	$28,150	$28,600
Gross Profit (Sales - COGS)	$16,800	$15,540	$16,280	$15,830