Question

Warnerwoods Company uses a periodic 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

195

units

@ $85 per unit

Mar.

5

Purchase

495

units

@ $90 per unit

Mar.

9

Sales

515

units

@ $120 per unit

Mar.

18

Purchase

310

units

@ $95 per unit

Mar.

25

Purchase

390

units

@ $97 per unit

Mar.

29

Sales

350

units

@ $130 per unit

Totals

1,390

units

865

units

For specific identification, the March 9 sale consisted of 60 units from beginning inventory and 455 units from the March 5 purchase; the March 29 sale consisted of 135 units from the March 18 purchase and 215 units from the March 25 purchase.

4. Compute gross profit earned by the company for each of the four costing methods. (Round your average cost per unit to 2 decimal places and final answers to nearest whole dollar.)

Answer 1

Ans.	FIFO:
	Date	Purchase					COGS			Ending Inventory
		Event		Unit	Unit Cost	Total	Unit	Unit Cost	Total	Unit	Unit Cost	Total
	Mar. 1	Beginning Balance		195	85	16,575	195	85	16,575	-	-	-
	Mar. 5	Purchase		495	90	44,550	495	90	44,550	-	-	-
	Mar. 18	Purchase		310	95	29,450	175	95	16,625	135	95	12,825
	Mar. 25	Purchase		390	97	37,830	-	-	-	390	97	37,830
	Total			1,390		128,405	865		77,750	525		50,655
Ans.	LIFO:
	Date	Purchase					COGS			Ending Inventory
		Event		Unit	Unit Cost	Total	Unit	Unit Cost	Total	Unit	Unit Cost	Total
	Mar. 1	Beginning Balance		195	85	16,575	-	-	-	195	85	16,575
	Mar. 5	Purchase		495	90	44,550	165	90	14,850	330	90	29,700
	Mar. 18	Purchase		310	95	29,450	310	95	29,450	-	-	-
	Mar. 25	Purchase		390	97	37,830	390	97	37,830	-	-	-
	Total			1,390		128,405	865		82,130	525		46,275
Ans.	Weighted Average:
	Date	Purchase					COGS			Ending Inventory
		Event		Unit	Unit Cost	Total	Unit	Unit Cost	Total	Unit	Unit Cost	Total
	Mar. 1	Beginning Balance		195	85	16,575	-	-	-	195	85	16,575
	Mar. 5	Purchase		495	90	44,550	-	-	-	495	90	44,550
	Total									690	89	61,125
	Mar. 9	Sold					515	89	45,622	175	89	15,503
	Mar. 18	Purchase		310	95	29,450				310	95	29,450
	Total									485	93	44,953
	Mar. 25	Purchase		390	97	37,830				485	93	44,953
										390	97	37,830
	Total									875	95	82,783
	Mar. 29	Sold					350	95	33,113	525	95	49,670
	Total			1,390		128,405	865		78,735	525	95	49,670
Ans.	Specific Identification:
	Date	Purchase					COGS			Ending Inventory
		Event		Unit	Unit Cost	Total	Unit	Unit Cost	Total	Unit	Unit Cost	Total
	Mar. 1	Beginning Balance		195	85	16,575	60	85	5,100	135	85	11,475
	Mar. 5	Purchase		495	90	44,550	455	90	40,950	40	90	3,600
	Mar. 18	Purchase		310	95	29,450	135	95	12,825	175	95	16,625
	Mar. 25	Purchase		390	97	37,830	215	97	20,855	175	97	16,975
	Total			1,390		128,405	865		79,730	525		48,675
Ans.	Computation of Gross profit earned by the company for each of the four costing methods:
				LIFO	FIFO	Weighted Average	Specific Identification
	Sales			$    107,300	$   107,300	$ 107,300	$         107,300
	Less: COGS			82,130	77,750	78,735	79,730
	Gross Profit			$      25,170	$      29,550	$    28,565	$           27,570