Question

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

100

units

@ $50.00 per unit

Mar.

5

Purchase

400

units

@ $55.00 per unit

Mar.

9

Sales

420

units

@ $85.00 per unit

Mar.

18

Purchase

120

units

@ $60.00 per unit

Mar.

25

Purchase

200

units

@ $62.00 per unit

Mar.

29

Sales

160

units

@ $95.00 per unit

Totals

820

units

580

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 80 units from beginning inventory and 340 units from the March 5 purchase; the March 29 sale consisted of 40 units from the March 18 purchase and 120 units from the March 25 purchase. (Round weighted average cost per unit to two decimals.)
  

Answer 1

Date	Transaction	Purchases			Cost of Goods Sold			Inventory Balance
		Units	Unit Cost	Amount	Units	Unit Cost	Amount	Units	Unit CostAmount
FIFO			$	$		$	$		$	$
March 1	Beginning Inventory							100	50	5,000
Mar 5	Purchases	400	55	22,000				100 400	50 55	5,000 22,000
Mar 9	Sale				100 320	50 55	5,000 17,600	80	55	4,400
Mar 18	Purchases	120	60	7,200				80 120	55 60	4,400 7,200
Mar 25	Purchase	200	62	12,400				80 120 200	55 60 62	4,400 7,200 12,400
Mar 29	Sales				80 80	55 60	4,400 4,800	40 200	60 62	2,400 12,400
Mar 31	Totals	720		41,600	580		31,800	240		14,800
LIFO		Purchases			Cost of Goods Sold			Inventory Balance
Mar 1	Beginning Inventory							100	50	5,000
Mar 5	Purchase	400	55	22,000				100 400	50 55	5,000 22,000
Mar 9	Sales				400 20	55 50	22,000 1,000	80	50	4,000
Mar 18	Purchase	120	60	7,200				80 120	50 60	4,000 7,200
Mar 25	Purchase	200	62	12,400				80 120 200	50 60 62	4,000 7,200 12,400
Mar 29	Sales				160	62	9,920	80 120 40	50 60 62	4,000 7,200 2,480
Mar 31	Totals	720		41,600	580		32,920	240		13,680
Weighted Average
Mar 1								100	50	5,000
Mar 5	400	55	22,000					100 400	50 55	5,000 22,000
Mar 5	Average Cost							500	54	27,000
Mar 9	Sales				420	54	22,680	80	54	4,320
Mar 18	Purchase	120	60	7,200				80 120	54 60	4,320 7,200
Mar 18	Average Cost							200	57.60	11,520
Mar 25	Purchase	200	62	12,400				200 200	57.60 62	11,520 12,400
Average Cost								400	59.80	23,920
Mar 29	Sales				160	59.80	9,568	240	59,80	14,352
Mar 31	Totals	720		41,600	580		32,248	240		14,352
Specific Identification
Mar 1								100	50	5,000
Mar 5	Purchase	400	55	22,000				100 400	50 55	5,000 22,000
Mar 9	Sales				80 340	50 55	4,000 18,700	20 60	50 55	1,000 3,300
Mar 18	Purchase	120	60	7,200				20 60 120	50 55 60	1,000 3,300 7,200
Mar 25	Purchase	200	62	12,400				20 60 120 200	50 55 60 62	1,000 3,300 7,200 12,400
Mar 29	Sales				40 120	60 62	2,400 7,440	20 60 80 80	50 55 60 62	1,000 3,300 4,800 4,960
Mar 31	Totals	720		41,600	580		32,540	240		14,060

Gross Profit:

	FIFO	LIFO	Weighted Average	Specific Identification
Sales	$ 50,900	$ 50,900	$ 50,900	$ 50,900
Cost of Goods Sold	31,800	32,940	32,248	32,540
Gross Profit	$ 19,100	$ 17,960	$ 18,652	$ 18,360