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Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.


  
Warnerwoods Company uses a perpetual 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   180 units @ $52.60 per unit        
  Mar. 5   Purchase   265 units @ $57.60 per unit        
  Mar. 9   Sales           340 units @ $87.60 per unit
  Mar. 18   Purchase   125 units @ $62.60 per unit        
  Mar. 25   Purchase   230 units @ $64.60 per unit        
  Mar. 29   Sales           210 units @ $97.60 per unit
        Totals   800 units     550 units  
 

1. Compute cost of goods available for sale and the number of units available for sale.

2. Compute the number of units in ending inventory.

3.Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification, the March 9 sale consisted of 105 units from beginning inventory and 235 units from the March 5 purchase; the March 29 sale consisted of 85 units from the March 18 purchase and 125 units from the March 25 purchase. (Round weighted average cost per unit to 2 decimal places.)

 

4. Compute gross profit earned by the company for each of the four costing methods. For specific identification, the March 9 sale consisted of 105 units from beginning inventory and 235 units from the March 5 purchase; the March 29 sale consisted of 85 units from the March 18 purchase and 125 units from the March 25 purchase. (Round weighted average cost per unit to two decimals.)

 

 

 

 

Solutions

Expert Solution

Req1: Cost of goods available for sale is as follows:

Beginning inventory (180 units @52.60):$ 9468

Purchase on Mar5 (265 [email protected]): $15,264

Purchase on Mar 18 (125 [email protected]): $7825

Purchase on Mar 25 (230 [email protected]): $14858

Total cost of goods avialable for sale:       $ 47,415

Req2: Number of units of Ending Inventory

Total units available for sale (180+265+125+230) : 800 units

Less: Units sold                                                        550 units

Units of Ending Inventory:                                       250 units

STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL FIFO METHOD
RECIEPTS COST OF GOODS SOLD BALANCE
DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $
1-Mar 180 52.6 9468
5-Mar 265 57.6 15264 180 52.6 9468
265 57.6 15264
9-Mar 180 52.6 9468
160 57.6 9216 105 57.6 6048
18-Mar 125 62.6 7825 105 57.6 6048
125 62.6 7825
25-Mar 230 64.6 14858 105 57.6 6048
125 62.6 7825
230 64.6 14858
29-Mar 105 57.6 6048 20 62.6 1252
105 62.6 6573 230 64.6 14858
TOTAL 620 37947 550 31305 250 16110
STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL LIFO METHOD
RECIEPTS COST OF GOODS SOLD BALANCE
DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $
1-Mar 180 52.6 9468
5-Mar 265 57.6 15264 180 52.6 9468
265 57.6 15264
9-Mar 265 57.6 15264
75 52.6 3945 105 52.6 5523
18-Mar 125 62.6 7825 105 52.6 5523
125 62.6 7825
25-Mar 230 64.6 14858 105 52.6 5523
125 62.6 7825
230 64.6 14858
29-Mar 210 64.6 13566 105 52.6 5523
125 62.6 7825
20 64.6 1292
TOTAL 620 37947 550 32775 250 14640
STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL WEIGHTED AVERAGE METHOD
RECIEPTS COST OF GOODS SOLD BALANCE
DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $
1-Mar 180 52.6 9468
5-Mar 265 57.6 15264 180 52.6 9468
265 57.6 15264
AVERAGE 445 55.58 24732
9-Mar 340 55.58 18897 105 55.58 5835
18-Mar 125 62.6 7825 105 55.58 5835
125 62.6 7825
25-Mar 230 64.6 14858 105 55.58 5835
125 62.6 7825
230 64.6 14858
AVERAGE 460 62 28518
29-Mar 210 62 13020 250 62 15498
TOTAL 620 37947 550 31917 250 62 15498
Req 3 FIFO LIFO WEIGHTED
Ending Inventory 16110 14640 15498
Cost of Goods sold 31305 32775 31917
Req 4 FIFO LIFO WEIGHTED
Sales (340 [email protected]+210 [email protected]) 50280 50280 50280
Less: Cost of goods sold 31305 32775 31917
Gross margin 18975 17505 18363

ekkarill92 answered 1 year ago
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