Question

1) Calculate the value of the ending inventory

2) Calculate and show the schedule for cost of goods sold

3) Calculate and show the schedule for gross profit

4) Calculate and show the gross profit percentage

USE    FIFO / LIFO / WEIGHTED AVERAGE FOR ALL:

Beginning Inv: 10,000 @ $20/unit

Purchased: 30,000 @ $25/unit

Purchased: 15,000 @ $30/unit

Sold: 44,000 @ $50/unit

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Answer 1

Given that:

Sales = 44,000 x 50 = 220,000

FIFO

	Receipts	Issues	Balance
							10,000	20	200,000
	30,000	25	750,000				10,000	20	200,000
							30,000	25	750,000
	15,000	30	450,000				10,000	20	200,000
							30,000	25	750,000
							15,000	30	450,000
				10,000	20	200,000	11,000	30	330,000
				30,000	25	750,000
				4,000	30	120,000
				44,000		1,070,000

1) Closing inventory is the Balance of Inventory as last ie 11,000 units of $330,000.

2) Cost of goods sold is thee total of the issues ie $1,070,000

3) Gross profit = Sales - cost of goods sold: = (44,000 x 50) - 1,070,000 = 2,200,000 - 1,070,000 = 1,130,000

4 )Gross Profit Percentage: = Gross profit / sales = 1,080,000 / 2,200,000 = 51.36 %

LIFO

	Receipts	Issues	Balance
							10,000	20	200,000
	30,000	25	750,000				10,000	20	200,000
							30,000	25	750,000
	15,000	30	450,000				10,000	20	200,000
							30,000	25	750,000
							15,000	30	450,000
				15,000	30	450,000	10,000	20	200,000
				29,000	25	725,000	1,000	30	30,000
				44,000		1,175,000

1) Closing inventory is the Balance of Inventory as last ie 11,000 units of $230,000.

2) Cost of goods sold is thee total of the issues ie $1,175,000

3) Gross profit = Sales - cost of goods sold: = (44,000 x 50) - 1,175,000 = 2,200,000 - 1,175,000 = 1,025,000

4 )Gross Profit Percentage: = Gross profit / sales = 1,080,000 / 2,200,000 = 46.59 %

WEIGHTED AVERAGE

Transaction	Units	Per unit	Cost
Beginning inventory	10,000	20	200,000
Purchases	30,000	25	750,000
Purchases	15,000	30	450,000
Total	55,000		1,400,000
less: Cost fo good sold (2)	44,000	25.45	1,120,000
Closing inventory (1)	11,000	25.45	280,000

Weighted Average cost = 1,400,000 / 55,000 = 25.45

3) Gross profit = Sales - cost of goods sold: = (44,000 x 50) - 1,120,000 = 2,200,000 - 1,120,000 = 1,080,000

4 )Gross Profit Percentage: = Gross profit / sales = 1,080,000 / 2,200,000 49,09 %

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