In: Accounting
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.
4. Compare the gross profit and the March 31 inventories, using the following column headings.
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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 |