Question

Problem 6-8A (Part Level Submission)

Mercer Inc. is a retailer operating in British Columbia. Mercer uses the perpetual inventory method. All sales returns from customers result in the goods being returned to inventory; the inventory is not damaged. Assume that there are no credit transactions; all amounts are settled in cash. You are provided with the following information for Mercer Inc. for the month of January 2015.

Date			Description		Quantity		Unit Cost or Selling Price
January	1		Beginning inventory		100		$15
January	5		Purchase		140		18
January	8		Sale		110		28
January	10		Sale return		10		28
January	15		Purchase		55		20
January	16		Purchase return		5		20
January	20		Sale		90		32
January	25		Purchase		20		22

For each of the following cost flow assumptions, calculate cost of goods sold, ending inventory, and gross profit. (1) LIFO. (2) FIFO. (3) Moving-average cost. (Round answers to 0 decimal places, e.g. $2,150.)

Answer 1

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-Jan							100	15	1500
5-Jan	140	18	2520				100	15	1500
							140	18	2520
8-Jan				100	15	1500	140	18	2520
15-Jan	50	20	1000				140	18	2520
							50	20	1000
20-Jan				90	18	1620	50	18	900
							50	20	1000
25-Jan	20	22	440				50	18	900
							50	20	1000
							20	22	440
TOTAL	210		3960	190		3120	120		2340
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-Jan							100	15	1500
5-Jan	140	18	2520				100	15	1500
							140	18	2520
8-Jan				100	18	1800	100	15	1500
							40	18	720
15-Jan	50	20	1000				100	15	1500
							40	18	720
							50	20	1000
20-Jan				50	20	1000	100	15	1500
				40	18	720
25-Jan	20	22	440				100	15	1500
							20	22	440
TOTAL	210		3960	190		3520	120		1940
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-Jan							100	15	1500
5-Jan	140	18	2520				100	15	1500
							140	18	2520
Average							240	16.75	4020
8-Jan				100	16.75	1675	140	16.75	2345
15-Jan	50	20	1000				140	16.75	2345
							50	20	1000
Average							190	17.605	3345
20-Jan				90	17.605	1584	100	17.605	1761
25-Jan	20	22	440				100	17.605	1761
							20	22	440
Average							120	18.342	2201
TOTAL	210		3960	190		3259	120	18.342	2201
			FIFO	LIFO	Average
Sales			5680	5680	5680
Less: Cost of goods sold			3120	3520	3259
Gross profit			2560	2160	2421
COGS			3120	3520	3259
Ending inventory			2340	1940	2201