In: Accounting

# Compute ending inventory, cost of goods sold, and gross profit.

My question: Assume the company uses three inventory pools instead of one. Compute ending inventory, cost of goods sold, and gross profit. (Round price index to 2 decimal places, e.g. 1.45 and final answers to 0 decimal places, e.g. 6,548.)

William’s Televisions produces television sets in three categories: portable, midsize, and flat-screen. On January 1, 2020, William adopted dollar-value LIFO and decided to use a single inventory pool. The company’s January 1 inventory consists of:

 Category Quantity Cost per Unit Total Cost Portable 5,400 $100$  540,000 Midsize 7,200 250 1,800,000 Flat-screen 2,700 400 1,080,000 15,300 $3,420,000 During 2020, the company had the following purchases and sales.  Category QuantityPurchased Cost per Unit QuantitySold Selling Priceper Unit Portable 13,500$ 110 12,600 $150 Midsize 18,000 300 21,600 400 Flat-screen 9,000 500 5,400 600 40,500 39,600 (b) Incorrect answer icon Your answer is incorrect. Assume the company uses three inventory pools instead of one. Compute ending inventory, cost of goods sold, and gross profit. (Round price index to 2 decimal places, e.g. 1.45 and final answers to 0 decimal places, e.g. 6,548.)  Ending inventory$ Cost of goods sold $Gross profit$

## Solutions

##### Expert Solution

Calculation of Ending Inventory:

Value of closing stock of Portable = =(5400*100)+(13500-12600)*110=$6,39,000 Value of closing stock of Mid-size=3600*250=$9,00,000

Value of closing stock of Flat screen = 2700*400+(9000-5400)*500 = $28,80,000.  Opening stock Purchases Sales Closing Stock Value of Closing Stock Portable 5400 13500 12600 6300 639000 Mid size 7200 18000 21600 3600 900000 Flat Screen 2700 9000 5400 6300 2880000 Calculation of Cost of goods sold : Cost of goods sold = Opening stock + Purchases -Closing Stock  Opening stock($) Purchases($) Closing Stock($) Cost of goods sold($) Portable 540000 1485000 639000 1386000 Mid size 1800000 5400000 900000 6300000 Flat Screen 1080000 4500000 2880000 2700000 Calculation of Gross profit:  Sales Value (1) Cost of goods sold (2) Gross Profit (1-2) Portable 1890000 1386000$504000 Mid size 8640000 6300000 $2340000 Flat Screen 3240000 2700000$540000

Gross profit

Portable                   $504000 Mid size$2340000

Flat Screen               \$540000