Question

In: Accounting

what is the solution to all parts Refer to the information in Exercise 6-7 and assume...

what is the solution to all parts

Refer to the information in Exercise 6-7 and assume the periodic inventory system is used. Determine the costs assigned to ending inventory and to cost of goods sold using (a) FIFO and (b) LIFO. Then (c) compute the gross margin for each method

date activities units acquired at cost units sold at retail

jan 1 beginning inventory 200 units @ $10 = 2,000

jan 10 sales 150 units @ $40

Mar 14 purchase 350 units @ $15 = 5,250

mar 15 sales 300 units @ $40

July 30 purchase 450 units @ $20 = 9,000

oct 5 sales 430 units @ $40

oct 26 purchase 100 units @ $25 = 2,500

totals 1,100 units $18,750 880 units

Solutions

Expert Solution

USING FIFO

Date Purchase Sale balance

Qty. Price Amt. Qty. price amt. qty. price amt.

jan 1 200 10 2000 - - - 200 10 2000

jan 10 - - - 150 40 6000    50 10 500

mar 14 350 15 5250 - - - 50 10 500

350 15 5250

mar 15 - - - 300 40 1200 100 15 1500

july 20 450 20 9000 - - - 100 15 1500

450 20 9000

oct 5 - - - 430 40 17200 120 20 2400

0ct 26 100 25 2500 - - - 120 20 2400

100 25 2500

220 4900

cost of ending inventory =120*20=2400 cost of good sold =150*10=1500   

+ 100*25=2500 + (50*10+250*15) =4250

4900 + (100*15+330*20) =8100

sale 13850

150*40+300*40+430*40=35200

grosss margin=35200-13850 *100 = 154.15% gross margin=35200-13850=21350

13850

USING LIFO

Date Purchase Sale balance

Qty. Price Amt. Qty. price amt. qty. price amt.

jan 1 200 10 2000 - - -    200 10 2000

jan 10 - - - 150 40 6000     50 10 500

mar 14 350 15 5250 - - - 50 10 500

350 15 5250

mar 15 - - - 300 40 1200 50 10 500

50 15 750

50 10 500

july 20 450 20 9000 - - - 50 15 750

   450 20 9000

oct 5 - - - 430 40 17200 50 10 500

50 15 750

20 20 400

0ct 26 100 25 2500 - - - 50 10 500

    50 15 750

20 20 400

100 25 2500

220 4150

cost of ending inventory cost of good sold sale

=50*10+50*15+20*20+100*25 =150*10+300*15+430*20 150*40+300*40+430*40

=4150 =14600 =35200

gross margin=35200-14600*100 =141.09% gross margin=35200-14600=20600

14600   

ekkarill92 answered 2 years ago
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