Question

Mittler & Sons Inc. had the following purchases and sales transactions during the month of April 2019. Mittler uses the perpetual inventory method to account for inventory.

Date Activities Units Acquired at Cost Units Sold at Retail Apr. 1 Beginning inventory 20 units @ $3,000 per unit Apr. 6 Purchase 30 units @ $3,500 per unit Apr. 9 Sales 35 units @ $12,000 per unit Apr. 17 Purchase 5 units @ $4,500 per unit Apr. 25 Purchase 10 units @ $4,800 per unit Apr. 30 Sales 25 units @ $14,000 per unit Total 65 units 60 units Required

1. Compute cost of goods available for sale and the number of units available for sale.

2. Compute the number of units in ending inventory.

3. Compute the cost assigned to ending inventory using (a) LIFO, and (b) weighted average (round amounts to two decimals, If needed)

4. Compute gross profit earned by the company for both costing methods in part 3.
Reminder: Continue using the excel HW policies for preparing your solutions to the above questions, including the standard four line heading. (Please send through a memory card chip)(don't forget to use excel)

Answer 1

Ans.	Date	Units	Rate	Total
	1-Apr	20	$3,000	$60,000
	6-Apr	30	$3,500	$105,000
	17-Apr	5	$4,500	$22,500
	25-Apr	10	$4,800	$48,000
	Total	65		$235,500
Ans. 1	Cost of goods available for sale = $235,500
	Number of units available for sale = 65
Ans. 2	No. of units in ending inventory = Number of units available for sale - No. of units sold
		65 - 60
		5 units
Ans. 3 a	Perpetual LIFO:
	Purchase				Cost of goods sold			Balance
	Date	Quantity	Rate	Total cost	Quantity	Rate	Total cost	Quantity	Rate	Total cost
	1-Apr	20	$3,000	$60,000				20	$3,000	$60,000
	6-Apr	30	$3,500	$105,000				20	$3,000	$60,000
								30	$3,500	$105,000
	9-Apr				30	$3,500	$105,000
					5	$3,000	$15,000	15	$3,000	$45,000
	17-Apr	5	$4,500	$22,500				15	$3,000	$45,000
								5	$4,500	$22,500
	25-Apr	10	$4,800	$48,000				15	$3,000	$45,000
								5	$4,500	$22,500
								10	$4,800	$48,000
	30-Apr				10	$4,800	$48,000
					5	$4,500	$22,500
					10	$3,000	$30,000	5	$3,000	$15,000
	Total				Cost of goods sold		$220,500	Cost of Ending inventory		$15,000
	*In Perpetual LIFO method the units that have purchased first, are sold last.
Ans.3 b	Weighted Average (Perpetual)
	Purchase				Cost of goods sold			Balance
	Date	Quantity	Rate	Total cost	Quantity	Rate	Total cost	Quantity	Rate	Total cost
	1-Apr	20	$3,000	$60,000				20	$3,000	$60,000
	6-Apr	30	$3,500	$105,000				50	$3,300	$165,000
	9-Apr				35	$3,300	$115,500	15	$3,300	$49,500
	17-Apr	5	$4,500	$22,500				20	$3,600	$72,000
	25-Apr	10	$4,800	$48,000				30	$4,000	$120,000
	30-Apr				25	$4,000	$100,000	5	$4,000	$20,000
	Total				Cost of goods sold		$215,500	Cost of Ending inventory		$20,000
	*Weighted average rate is calculated by using the formula of (Total available balance / Total units available).
Ans. 4			LIFO	Weighted avg.
	Sales		$770,000	$770,000
	Less: cost of goods sold		$220,500	$215,500
	Gross profit		$549,500	$554,500
	*Calculations for sales
	Date	Units	Rate	Total
	9-Apr	35	$12,000	$420,000
	30-Apr	25	$14,000	$350,000
	Total sales			$770,000