Question

Anabtawi Company uses the periodic inventory method and had the following inventory information available: ( 8 points)

Date

Explanation

Number of Units

Unit Cost

Total Cost

January 1

Beginning inventory

100

$4

$400

January 20

Purchase

400

$5

$2,000

July 25

Purchase

300

$6

$1,800

October 20

Purchase

200

$7

$1,400

Total

1000

$5,600

A physical count of inventory on December 31 revealed that there were 300 units on hand.

Assume that the company uses the FIFO method. The Ending Inventoryamount is $

Answer 1

Assume that the company uses the Lifo method and the selling price of the unit was $10 what is the Gross profit $

Answer 2

Assume that the company uses the Average Cost method. The value of the Cost of Goods Sold on December 31 is $

Answer 3

Assume that the company uses the LIFO method. The ending Inventory amount is $

Answer 4

Answer 1

Periodical Inventory
Inventory Using FIFO
Details	Unit	Rate	Inventory Cost $
Opening Balance on Jan 1	100	$     4.00	$     400.00
Purchases
Jan 20 purchase	400	$     5.00	$ 2,000.00
Jul 25 Purchase	300	$     6.00	$ 1,800.00
Oct 20 Purchase	200	$     7.00	$ 1,400.00
Total Goods available for sale	1000		$ 5,600.00
Less Closing Inventory count of Dec 31	300
Sales During the Year	700
Sales Details by FIFO
Sales of Opening stock	100	$     4.00	$     400.00
sales of Jan 20 purchased units	400	$     5.00	$ 2,000.00
sales of Jul 25 Purchased units	200	$     6.00	$ 1,200.00
Total Sales	700		$ 3,600.00
closing Stock	300		$ 2,000.00
Ans 1. Ending Inventory on Dec 31 is $2,000

Details	Unit	Rate	Inventory Cost $	Sales revenue
Sales Details by LIFO
Sales Price / unit =$10
sale Oct 20 Purchased units	200	$     7.00	$ 1,400.00	$ 2,000.00
Sale of Jul 25 Purchased units	300	$     6.00	$ 1,800.00	$ 3,000.00
Sale of Jan 20 purchased units	200	$     5.00	$ 1,000.00	$ 2,000.00
Total Sales	700		$ 4,200.00	$ 7,000.00
Total Sales Price =$7,000
Less COGS= $4,200
Gross Profit=$2,800
Ans 2.So the Gross Profit is $2,800

Ending Inventory uing LIFO
Details	Unit	Rate	Inventory Cost $
Opening Balance on Jan 1	100	$     4.00	$     400.00
Balance from Jan 20 purchased stock	200	$     5.00	$ 1,000.00
Total Closing Inventory	300		$ 1,400.00
Ans 4. Closing inventory by LIFO=$1,400
Inventory Using Wtd Average
Details	Unit	Rate	Inventory Cost $
Opening Balance on Jan 1	100	$     4.00	$     400.00
Purchases
Jan 20 purchase	400	$     5.00	$ 2,000.00
Jul 25 Purchase	300	$     6.00	$ 1,800.00
Oct 20 Purchase	200	$     7.00	$ 1,400.00
Total Goods available for sale	1000		$ 5,600.00
Weighted Average Inventory cost / Unit=$5600/1000= $5.6 per unit
Less Closing Inventory count of Dec 31	300
Sales During the Year	700
COSG using Wtd Avg cost of Inventory =700*$5.6=$3,920

Ans 3. COGS value Wtd average=$3,920