Question
In: Accounting
Required: 1. Determine the dollar amount of cost of goods sold, dollar amount of ending inventory,...
Required:
1. Determine the dollar amount of cost of goods sold, dollar amount of ending inventory, and dollar amount of gross margin using the FIFO, LIFO and specific identification inventory costing methods for the month of October.
2. Complete journal entries for October 3rd and 8th using the specific identification method assuming all purchases and sales were on account.
|
Beginning Inventory Units 1 – 5 at $24 each |
120 |
|
|
October 3 Purchased Units 6 – 15 at $25 each |
250 |
|
|
October 8 Sold 8 Units at $40 each |
320 |
|
|
October 15 Purchased Units 16 – 25 at $26 each |
260 |
|
|
October 20 Sold 9 Units at $40 each |
360 |
|
|
October 25 Purchased Units 26 – 35 at $27 each |
270 |
|
|
October 31 Sold 12 Units at $42 each |
504 |
For Specific Identification purposes the inventory sold were units 1, 2, 3, 6, 7, 8, 9, 10 on October 8th, units 4, 11, 12, 13, 18, 19, 20, 21, 22 on October 20th and units 14, 23, 26, 27, 28, 29, 30, 31, 32, 33, 34 and 35 on October 31st.
Solutions
Expert Solution
1.
| A | ||||||||||
| FIFO | ||||||||||
| DATE | PARTICULARS | UNITS | PRICE | TOTAL | UNITS | PRICE | TOTAL | BALANCE UNITS | PRICE | BALANCE COST |
| Opening Inventory | 5 | 24 | 120 | 5 | 24 | 120 | ||||
| Oct-03 | Purchases | 10 | 25 | 250 | 5 | 24 | 120 | |||
| 10 | 25 | 250 | ||||||||
| Oct-08 | Sales | 5 | 24 | 120 | 7 | 25 | 175 | |||
| 3 | 25 | 75 | ||||||||
| Oct-15 | Purchases | 10 | 26 | 260 | 7 | 25 | 175 | |||
| 10 | 26 | 260 | ||||||||
| Oct-20 | Sales | 7 | 25 | 175 | 8 | 26 | 208 | |||
| 2 | 26 | 52 | ||||||||
| Oct-25 | Purchases | 10 | 27 | 270 | 8 | 26 | 208 | |||
| 10 | 27 | 270 | ||||||||
| Oct-31 | Sales | 8 | 26 | 208 | 6 | 27 | 162 | |||
| 4 | 27 | 108 | ||||||||
| TOTAL | 35 | 900 | 29 | 738 | 6 | 27 | 162 | |||
| Cost of Goods Sold | 738 (calculated Above i.e. Total of the sales units at costs at FIFO) | |||||||||
| Ending Inventory | $ 162 (6 balance units @$27) | |||||||||
| Gross Margin | (Total Sales Revenue - Cost of Goods Sold) | |||||||||
| [(8*40 + 9*40 + 12*42)-738] = 1184-738 = 446 i.e. 37.67% | ||||||||||
| B | ||||||||||
| LIFO | ||||||||||
| DATE | PARTICULARS | UNITS | PRICE | TOTAL | UNITS | PRICE | TOTAL | BALANCE UNITS | PRICE | BALANCE COST |
| Opening Inventory | 5 | 24 | 120 | 5 | 24 | 120 | ||||
| Oct-03 | Purchases | 10 | 25 | 250 | 5 | 24 | 120 | |||
| 10 | 25 | 250 | ||||||||
| Oct-08 | Sales | 8 | 25 | 200 | 5 | 24 | 120 | |||
| 2 | 25 | 50 | ||||||||
| Oct-15 | Purchases | 10 | 26 | 260 | 5 | 24 | 120 | |||
| 2 | 25 | 50 | ||||||||
| 10 | 26 | 260 | ||||||||
| Oct-20 | Sales | 9 | 26 | 234 | 5 | 24 | 120 | |||
| 2 | 25 | 50 | ||||||||
| 1 | 26 | 26 | ||||||||
| Oct-25 | Purchases | 10 | 27 | 270 | 5 | 24 | 120 | |||
| 2 | 25 | 50 | ||||||||
| 1 | 26 | 26 | ||||||||
| 10 | 27 | 270 | ||||||||
| Oct-31 | Sales | 10 | 27 | 270 | 5 | 24 | 120 | |||
| 1 | 26 | 26 | 1 | 25 | 25 | |||||
| 1 | 25 | 25 | ||||||||
| TOTAL | 35 | 900 | 29 | 755 | 6 | 145 | ||||
| Cost of Goods Sold | 755 (calculated Above i.e. Total of the sales units at costs at LIFO) | |||||||||
| Ending Inventory | $ 145 (5 balance units @$24+1 balance unit @$25) | |||||||||
| Gross Margin | (Total Sales Revenue - Cost of Goods Sold) | |||||||||
| [(8*40 + 9*40 + 12*42)-755] = 1184-755 = 429 i.e. 36.23% | ||||||||||
| C | ||||||||||
| Specific identification | ||||||||||
| DATE | PARTICULARS | UNITS | PRICE | TOTAL | UNITS | PRICE | TOTAL | BALANCE UNITS | PRICE | BALANCE COST |
| Opening Inventory | 1 to 5 | 24 | 120 | 5 (from 1 to 5) | 24 | 120 | ||||
| Oct-03 | Purchases | 6 to 15 | 25 | 250 | 5 (from 1 to 5) | 24 | 120 | |||
| 10 (from 6 to 15) | 25 | 250 | ||||||||
| Oct-08 | Sales | 3 (from 1 to 5) | 24 | 72 | 2 (from 1 to 5) | 24 | 48 | |||
| 5 (from 6 to 15) | 25 | 125 | 5 (from 6 to 15) | 25 | 125 | |||||
| Oct-15 | Purchases | 16 to 25 | 26 | 260 | 2 (from 1 to 5) | 24 | 48 | |||
| 5 (from 6 to 15) | 25 | 125 | ||||||||
| 10 (from 16 to 25) | 26 | 260 | ||||||||
| Oct-20 | Sales | 1 (from 1 to 5) | 24 | 24 | 1 (from 1 to 5) | 24 | 24 | |||
| 3 (from 6 to 15) | 25 | 75 | 2 (from 6 to 15) | 25 | 50 | |||||
| 5 (from 16 to 25) | 26 | 130 | 5 (from 16 to 25) | 26 | 130 | |||||
| Oct-25 | Purchases | 26 to 35 | 27 | 270 | 1 (from 1 to 5) | 24 | 24 | |||
| 2 (from 6 to 15) | 25 | 50 | ||||||||
| 5 (from 16 to 25) | 26 | 130 | ||||||||
| 10 (from 26 to 35) | 27 | 270 | ||||||||
| Oct-31 | Sales | 1 (from 6 to 15) | 25 | 25 | 1 (from 1 to 5) | 24 | 24 | |||
| 1 (from 16 to 25) | 26 | 26 | 1 (from 6 to 15) | 25 | 25 | |||||
| 10 (from 26 to 35) | 27 | 270 | 4 (from 16 to 25) | 26 | 104 | |||||
| TOTAL | 35 | 900 | 29 | 747 | 6 | 153 | ||||
| Cost of Goods Sold | 747 (calculated Above i.e. Total of the sales units at costs at Specific Identification) | |||||||||
| Ending Inventory | $ 153 (1 balance units @$24+ 1@$25 + 4@26) | |||||||||
| Gross Margin | (Total Sales Revenue - Cost of Goods Sold) | |||||||||
| [(8*40 + 9*40 + 12*42)-747] = 1184-747 = 437 i.e. 36.91% | ||||||||||
2. Journal Entries
| DATE | PARTICULARS | DEBIT | CREDIT |
| Oct-03 | Purchases | 250 | |
| To Accounts Payable | 250 | ||
| Oct-08 | Accounts Receivable | 320 | |
| To Sales (3*24 + 5*25) | 197 | ||
| To Profit on sale (320-197) | 123 |
ekkarill92 answered 2 years agoRelated Solutions
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November 10
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Cost of goods sold
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