Question

Use the following information to answer the questions relating to Mugudia:

Mugudia and Daughters Company is a wholesale seed distributor. The records reflected the following for January Year 1. All purchases and sales were made in cash.

Beginning Inventory	100 units (purchased for $1.00 each)
Purchase - January 6th	200 units (purchased for $1.20 each)
Sale - January 10th	110 units (sold for $2.40 each)
Purchase - January 14th	100 units (purchased for $1.30 each)
Sale - January 29th	170 units (sold for $2.60 each)

a. Calculate January Year 1 cost of goods sold for Mugudia, assuming that Mugudia uses the FIFO cost flow assumption and a perpetual inventory system.

b. Calculate January Year 1 ending inventory for Mugudia, assuming that Mugudia uses the LIFO cost flow assumption and a perpetual inventory system.

c. Calculate January Year 1 gross profit assuming that Mugudia uses the LIFO cost flow assumption and a periodic inventory system.

d. Calculate January Year 1 cost of goods sold for Mugudia, assuming that Mugudia uses the periodic inventory system and a weighted-average cost flow assumption.

Answer 1

a. Calculate January Year 1 cost of goods sold for Mugudia, assuming that Mugudia uses the FIFO cost flow assumption and a perpetual inventory system.

FIFO-Perpetual	Purchase			Cost of goods sold			Ending inventory		.
Date	Units	Cost / units	Total cost	Units	Cost / units	Total cost	Units	Cost / units	Total cost
Beginning inventory							100	1	100
Jan-06	200	1.2	240				100	1	100
							200	1.2	240
Jan-10				100	1	100
				10	1.2	12	190	1.2	228
Jan-14	100	1.3	130				190	1.2	228
							100	1.3	130
Jan-29				170	1.2	204	20	1.2	24
							100	1.3	130
Total				280		316	120		154

cost of goods sold = $316

b. Calculate January Year 1 ending inventory for Mugudia, assuming that Mugudia uses the LIFO cost flow assumption and a perpetual inventory system.

LIFO-Perpetual	Purchase			Cost of goods sold			Ending inventory		.
Date	Units	Cost / units	Total cost	Units	Cost / units	Total cost	Units	Cost / units	Total cost
Beginning inventory							100	1	100
Jan-06	200	1.2	240				100	1	100
							200	1.2	240
Jan-10				110	1.2	132	100	1	100
							90	1.2	108
Jan-14	100	1.3	130				100	1	100
							90	1.2	108
							100	1.3	130
Jan-29				100	1.3	130	100	1	100
				70	1.2	84	20	1.2	24
Total				280		346	120		124

Year 1 ending inventory = $124

c. Calculate January Year 1 gross profit assuming that Mugudia uses the LIFO cost flow assumption and a periodic inventory system.

Under periodic

Cost of goods available

Date	Units	Cost / units	Total cost
Beginning inventory	100	1	100
Jan 6	200	1.2	240
Jan 14	100	1.3	130
Total	400		$470

Cost of goods sold

Units sold total = 110 + 170 = 280 units

Date	Units	Cost / units	Total cost
Jan 14	100	1.3	130
Jan 6	180	1.2	216
Total	280		$346

Sales 110 * 2.40 + 170 * 2.60	$706
Less: Cost of goods sold	346
Gross profit	$360

d. Calculate January Year 1 cost of goods sold for Mugudia, assuming that Mugudia uses the periodic inventory system and a weighted-average cost flow assumption.

Cost of goods available

Date	Units	Cost / units	Total cost
Beginning inventory	100	1	100
Jan 6	200	1.2	240
Jan 14	100	1.3	130
Total	400	1.175	$470

weighted-average cost = 470 / 400 = 1.175

Units sold = 280 units

Cost of goods sold = 280 * 1.175 = $329