Question

In: Accounting

The beginning inventory for Midnight Supplies and data on purchases and sales for a three month...

The beginning inventory for Midnight Supplies and data on purchases and sales for a three month period are as follows:

Date

Transaction Number of Units Per Unit Total
Jan. 1 Inventory 7,500 $ 75.00 $ 562,500
10 Purchase 22,500 85.00 1,912,500
28 Sale 11,250 150.00 1,687,500
30 Sale 3,750 150.00 562,500
Feb. 5 Sale 1,500 150.00 225,000
10 Purchase 54,000 87.50 4,725,000
16 Sale 27,000 160.00 4,320,000
28 Sale 25,500 160.00 4,080,000
Mar. 5 Purchase 45,000 89.50 4,027,500
14 Sale 30,000 160.00 4,800,000
25 Purchase 7,500 90.00 675,000
30 Sale 26,250 160.00 4,200,000
Instructions
1. Determine the inventory on March 31 and the cost of goods sold for the three-month period, using the first-in, first-out method and the periodic inventory system.
2. Determine the inventory on March 31 and the cost of goods sold for the three-month period, using the last-in, first-out method and the periodic inventory system.
3. Determine the inventory on March 31 and the cost of goods sold for the three-month period, using the weighted average cost method and the periodic inventory system. Round the weighted average unit cost to the nearest cent and use that amount in subsequent computations.
4.

3. Determine the inventory on March 31 and the cost of goods sold for the three-month period, using the weighted average cost method and the periodic inventory system. Round the weighted average unit cost to the nearest cent and use that amount in subsequent computations.

Inventory, March 31
Cost of goods sold

4. Compare the gross profit and the March 31 inventories, using the following column headings.

1

FIFO

LIFO

Weighted Average

2

Sales

3

Cost of goods sold

4

Gross profit

5

6

Inventory, March 31

Compare the gross profit and the March 31 inventories.

1. Determine the inventory on March 31 and the cost of goods sold for the three-month period, using the first-in, first-out method and the periodic inventory system.

Inventory, March 31
Cost of goods sold


2. Determine the inventory on March 31 and the cost of goods sold for the three-month period, using the last-in, first-out method and the periodic inventory system.

Inventory, March 31
Cost of goods sold



Solutions

Expert Solution

Cost of goods sold and ending Inventory is as computed below:

FIFO
Date Explanation Units Unit Cost Cost
Jan-01 Opening Inventory 7,500 75.00 562,500
Jan-10 Purchased Inventory 22,500 85.00 1,912,500
Feb-10 Purchased Inventory 54,000 87.50 4,725,000
Mar-05 Inventory returned 45,000 89.50 4,027,500
Mar-25 Purchased Inventory 7,500 90.00 675,000
Cost of goods available for sale 136,500 11,902,500
Sales
Jan-28 Sales 7,500 75 562,500
Jan-28 Sales 3,750 85 318,750
Jan-30 Sales 3,750 85 318,750
Feb-05 Sales 1,500 85 127,500
Feb-16 Sales 13,500 85 1147500
Feb-16 Sales 13,500 87.50 1181250
Feb-28 Sales 25,500 87.50 2231250
Mar-14 Sales 15,000 87.50 1312500
Mar-14 Sales 15,000 89.50 1342500
Mar-30 Sales 26,250 89.50 2349375
Cost of goods sold 125,250 10,891,875
Ending Inventory
Goods Purchased on Mar 5 3,750 89.50 335625
Goods purchased on Mar 25 7,500 90.00 675,000
11,250 1,010,625
LIFO
Date Explanation Units Unit Cost Cost
Jan-01 Opening Inventory 7,500 75.00 562,500
Jan-10 Purchased Inventory 22,500 85.00 1,912,500
Feb-10 Purchased Inventory 54,000 87.50 4,725,000
Mar-05 Inventory returned 45,000 89.50 4,027,500
Mar-25 Purchased Inventory 7,500 90.00 675,000
Cost of goods available for sale 136,500 11,902,500
Sales
Jan-28 Sales 7,500 90.00 675,000
Jan-28 Sales 3,750 89.50 335,625
Jan-30 Sales 3,750 89.50 335,625
Feb-05 Sales 1,500 89.50 134,250
Feb-16 Sales 27,000 89.50 2416500
Feb-28 Sales 9,000 89.50 805500
Feb-28 Sales 16,500 87.50 1443750
Mar-14 Sales 30,000 87.50 2625000
Mar-30 Sales 7,500 87.50 656250
Mar-30 Sales 18,750 85.00 1593750
Cost of goods sold 125,250 11,021,250
Ending Inventory
Goods Purchased on Jan 10 3,750 85.00 318750
Opening Inventory 7,500 75.00 562,500
11,250 881,250
Weighted Average
Date Explanation Units Unit Cost Cost
Jan-01 Opening Inventory 7,500 75.00 562,500
Jan-10 Purchased Inventory 22,500 85.00 1,912,500
Feb-10 Purchased Inventory 54,000 87.50 4,725,000
Mar-05 Inventory returned 45,000 89.50 4,027,500
Mar-25 Purchased Inventory 7,500 90.00 675,000
Cost of goods available for sale 136,500 87.20 11,902,500
Cost of goods sold 125,250 87.20 10,921,525
Ending Inventory 11,250 87 980,975

Gross profit is as calculated below:

FIFO LIFO Weighted
Sales
16,500*150 2,475,000 2,475,000 2,475,000
108,750*160 17,400,000 17,400,000 17,400,000
Cost of goods sold 10,891,875 11,021,250 10,921,525
Gross Profit 8,983,125 8,853,750 8,953,475

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