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The following data represent the inventory figures for 55-gallon fish tanks at an aquarium. 55-Gallon Fish...

The following data represent the inventory figures for 55-gallon fish tanks at an aquarium. 55-Gallon Fish Tanks Inventory Amount January 1 Beginning Inventory 48 units @ $38.00 March 12 Purchase 70 units @ $36.50 July 19 Purchase 135 units @ $39.70 September 2 Purchase 85 units @ $41.75 Fish Tanks Available for Sale: Cost of Tanks Available for Sale: (a) How many fish tanks did the aquarium have available for sale? fish tanks (b) Calculate the total cost (in $) of the tanks available for sale. $ (c) If physical inventory on December 31 showed 88 tanks on hand, calculate their dollar value by using FIFO. $ (d) Calculate the value of the 88 tanks by using LIFO (in $). $ (e) Calculate the dollar value of the 88 tanks by using the average cost method (Round your answer to the nearest cent). $

A particular gym maintains a gross margin of 55% on all its weight training products. In April, the gym had a beginning inventory of $142,000, net purchases of $206,000, and net sales of $436,000. Use the gross profit method to estimate the cost (in $) of ending inventory.

$

Solutions

Expert Solution

A) Jan1 :- opening inventory 48 units @ $38 =$1,824

Mar12 :- Purchase 70 units @ $36.50 =$2,555

Jul19 :- Purchase 135 units @$39.70 =$5,359.5

Sep2 :- Purchase 85 units @$41.75 =$3,548.75

Total 338 units =$13,287.25

a) Fish tanks available for sale = 338 units

b) Cost of tanks avaialbale for sale = $13,287.25

c) Using FIFO, value (in $) of 88 units on Dec 31

This means that out of 338 units 250 units are sold in the following sequence

i.e. 48 units @ $38 - 70 units @ $36.50 - 132 units @ $39.70

Thus Value of closing inventory is,

3 units@$39.70 + 85 units@$41.75 = $3,667.85

d) Using LIFO, value (in $) of 88 units on Dec 31

This means that out of 338 units 250 units are sold in the following sequence

i.e. 85 units@$41.75 - 135 units@$39.70 - 30 units @$36.50

Thus Value of closing inventory is,

40 units@$36.50 + 48 units@$38 = $3,284

e) Using Average cost method,

Average cost of inventory = $13287.25/338 units = $39 (approx)

Value of closing inventory of 88 units = $39.31 x 88units = $3,459

B) Closing inventory = Opening inventory + Net purchases + Gross profit - Net Sales

= $142,000 + $206,000 + ($436,000 * 55/155) - $436,000

= $66710

keosha answered 7 months ago
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