Question

Athletic world began October with merchandise inventory of 72 crates of vitamins that cost a total of $3600 During the month Athletic world purchased and sold merchandise on account as follows

Data Table

Oct 5th Purchase 120 crates @ 78 each

13 Sale 130 crates @ 98 each

18 Purchase 124 crates @ 90 each

26 Sale 130 crates @ 102 each

Prepare a perpetual inventory​ record, using the FIFO inventory costing​method, and determine the​ company's cost of goods​ sold, ending merchandise​ inventory, and gross profit.
2.	Prepare a perpetual inventory​ record, using the LIFO inventory costing​method, and determine the​ company's cost of goods​ sold, ending merchandise​ inventory, and gross profit.
3.	Prepare a perpetual inventory​ record, using the​ weighted-average inventory costing​ method, and determine the​ company's cost of goods​ sold, ending merchandise​ inventory, and gross profit.​ (Round weighted-average cost per unit to the nearest cent and all other amounts to the nearest​ dollar.)
4.	If the business wanted to pay the least amount of income taxes​ possible, which method would it​ choose?

Answer 1

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Part 1:	FIFO
		Purchase			Sale			Ending Inventory
Date		Units	Rate	Cost	Units	Rate	Cost	Units	Rate	Cost
Beginning		72	$        50.00	$        3,600				72	$    50.00	$    3,600
Oct 5		120	$        78.00	$        9,360				72	$    50.00	$    3,600
								120	$    78.00	$    9,360
Oct 13					72	$    50.00	$    3,600	62	$    78.00	$    4,836
					58	$    78.00	$    4,524
Oct 18		124	$        90.00	$     11,160				62	$    78.00	$    4,836
								124	$    90.00	$ 11,160
Oct 26					62	$    78.00	$    4,836	56	$    90.00	$    5,040
					68	$    90.00	$    6,120
Total							$ 19,080			$    5,040
Ending Inventory	$         5,040
Cost of Goods Sold	$       19,080
Gross Profit:
Sale (130*98)+(130*102)	$       26,000
Less: Cost of Goods Sold	$       19,080
Gross Profit	$         6,920
Part 2:	LIFO
		Purchase			Sale			Ending Inventory
Date		Units	Rate	Cost	Units	Rate	Cost	Units	Rate	Cost
Beginning		72	$        50.00	$        3,600				72	$    50.00	$    3,600
Oct 5		120	$        78.00	$        9,360				72	$    50.00	$    3,600
								120	$    78.00	$    9,360
Oct 13					120	$    78.00	$    9,360	62	$    50.00	$    3,100
					10	$    50.00	$       500
Oct 18		124	$        90.00	$     11,160				62	$    50.00	$    3,100
								124	$    90.00	$ 11,160
Oct 26					124	$    90.00	$ 11,160	56	$    50.00	$    2,800
					6	$    50.00	$       300
Total							$ 21,320			$    2,800
Ending Inventory	$         2,800
Cost of Goods Sold	$       21,320
Gross Profit:
Sale (130*98)+(130*102)	$       26,000
Less: Cost of Goods Sold	$       21,320
Gross Profit	$         4,680
Part 3 WA
		Purchase			Sale			Ending Inventory
Date		Units	Rate	Cost	Units	Rate	Cost	Units	Rate	Cost
Beginning		72	$        50.00	$        3,600				72	$    50.00	$    3,600
Oct 5		120	$        78.00	$        9,360				192	$    67.50	$ 12,960
Oct 13					130	$    67.50	$    8,775	62	$    67.50	$    4,185
Oct 18		124	$        90.00	$     11,160				186	$    82.50	$ 15,345
Oct 26					130	$    82.50	$ 10,725	56	$    82.50	$    4,620
Total							$ 19,500			$    4,620
Ending Inventory	$         4,620
Cost of Goods Sold	$       19,500
Gross Profit:
Sale (130*98)+(130*102)	$       26,000
Less: Cost of Goods Sold	$       19,500
Gross Profit	$         6,500
Part -4
LIF as COGS is highest