Question

[The following information applies to the questions displayed below.]

Greg’s Bicycle Shop has the following transactions related to its top-selling Mongoose mountain bike for the month of March. Greg's Bicycle Shop uses a periodic inventory system.

Date	Transactions	Units	Cost per Unit	Total Cost
March 1	Beginning inventory	20	$160	$	3,200
March 5	Sale ($220 each)	15
March 9	Purchase	10	180		1,800
March 17	Sale ($270 each)	8
March 22	Purchase	10	190		1,900
March 27	Sale ($295 each)	12
March 30	Purchase	8	210		1,680
				$	8,580

rev: 02_28_2017_QC_CS-80932

17.

value:
10.00 points

Required information

Required:

1. Calculate ending inventory and cost of goods sold at March 31, using the specific identification method. The March 5 sale consists of bikes from beginning inventory, the March 17 sale consists of bikes from the March 9 purchase, and the March 27 sale consists of four bikes from beginning inventory and eight bikes from the March 22 purchase.
  

References

eBook & Resources

WorksheetLearning Objective: 06-03 Determine the cost of goods sold and ending inventory using different inventory cost methods.Learning Objective: 06-05 Record inventory transactions using a perpetual inventory system.

Difficulty: 3 HardLearning Objective: 06-04 Explain the financial statement effects and tax effects of inventory cost methods.

Check my work

18.

value:
10.00 points

Required information

2. Using FIFO, calculate ending inventory and cost of goods sold at March 31.
  

References

eBook & Resources

WorksheetLearning Objective: 06-03 Determine the cost of goods sold and ending inventory using different inventory cost methods.Learning Objective: 06-05 Record inventory transactions using a perpetual inventory system.

Difficulty: 3 HardLearning Objective: 06-04 Explain the financial statement effects and tax effects of inventory cost methods.

Check my work

19.

value:
10.00 points

Required information

3. Using LIFO, calculate ending inventory and cost of goods sold at March 31.
  

References

eBook & Resources

WorksheetLearning Objective: 06-03 Determine the cost of goods sold and ending inventory using different inventory cost methods.Learning Objective: 06-05 Record inventory transactions using a perpetual inventory system.

Difficulty: 3 HardLearning Objective: 06-04 Explain the financial statement effects and tax effects of inventory cost methods.

Check my work

20.

value:
10.00 points

Required information

4. Using weighted-average cost, calculate ending inventory and cost of goods sold at March 31. (Round your intermediate and final answers to 2 decimal places.)
  

References

eBook & Resources

WorksheetLearning Objective: 06-03 Determine the cost of goods sold and ending inventory using different inventory cost methods.Learning Objective: 06-05 Record inventory transactions using a perpetual inventory system.

Difficulty: 3 HardLearning Objective: 06-04 Explain the financial statement effects and tax effects of inventory cost methods.

Check my work

21.

value:
10.00 points

Required information

5. Calculate sales revenue and gross profit under each of the four methods.(Round weighted-average cost amounts to 2 decimal places.)
  

References

eBook & Resources

WorksheetLearning Objective: 06-03 Determine the cost of goods sold and ending inventory using different inventory cost methods.Learning Objective: 06-05 Record inventory transactions using a perpetual inventory system.

Difficulty: 3 HardLearning Objective: 06-04 Explain the financial statement effects and tax effects of inventory cost methods.

Check my work

22.

value:
5.00 points

Required information

6. Comparing FIFO and LIFO, which one provides the more meaningful measure of ending inventory?

FIFO

LIFO

References

eBook & Resources

Multiple ChoiceLearning Objective: 06-03 Determine the cost of goods sold and ending inventory using different inventory cost methods.Learning Objective: 06-05 Record inventory transactions using a perpetual inventory system.

Difficulty: 3 HardLearning Objective: 06-04 Explain the financial statement effects and tax effects of inventory cost methods.

Check my work

23.

value:
10.00 points

Required information

7. If Greg’s Bicycle Shop chooses to report inventory using LIFO instead of FIFO, record the LIFO adjustment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
  

Answer 1

Formula Sheet

A	B	C	D	E	F	G	H	I
2
3		Date	Transactions	Units	Costs per unit	Total Cost
4		43160	Beginning Inventory	20	160	=E4*F4
5		43164	Sale ($220 each)	15
6		43168	Purchase	10	180	=E6*F6
7		43176	Sale($270 each)	8
8		43181	Purchase	10	190	=E8*F8
9		43186	Sale ($295)	12
10		43189	Purchase	8	210	=E10*F10
11
12		Total Units Sold	=E5+E7+E9
13
14		1)
15		Specific Identification:
16		In specific identification method, cost of specific goods sold are considered to calculated cost of goods sold.
17
18		5-Mar Sale	=$E$5
19		17-Mar Sale	=$E$7
20		27-Mar Sale	=$E$9
21		Total Units sold	=D18+D19+D20
22
23		Specific Identification
24			Units	Cost per unit	Total
25		Beginning Inventory	=$E$4	=$F$4	=D25*E25
26		Purchases
27		43168	=$E$6	=$F$6	=D27*E27
28		43181	=$E$8	=$F$8	=D28*E28
29		43189	=$E$10	=$F$10	=D29*E29
30		Total purchases	=D27+D28+D29		=SUM(F27:F29)
31		Cost of Goods Available for sale	=D25+D30		=F25+F30
32		Cost of Goods Sold
33		5-Mar Sale
34		Units from Beginning Inventory	=D18	=E25	=D34*E34
35		17-Mar Sale
36		Units from Mar 9 Purchase	=D19	=E27	=D36*E36
37		27-Mar Sale
38		Units from Beginning Inventory	4	=E25	=D38*E38
39		Units from Mar-22 Purchase	=D20-D38	=E28	=D39*E39
40		Total Cost of Goods Sold	=SUM(D34:D39)		=SUM(F34:F39)
41		Ending Inventory	=D31-D40		=F31-F40
42
43		Hence using specific inventory method,
44		Cost of goods sold	=F40
45		Ending Inventory	=F41
46
47
48		2)
49
50		FIFO method:
51		In FIFO method invetory that is purchased first is sold first and newer inventory is sold after that.
52
53		5-Mar Sale	=$E$5
54		17-Mar Sale	=$E$7
55		27-Mar Sale	=$E$9
56		Total Units sold	=D53+D54+D55
57
58		FIFO
59			Units	Cost per unit	Total
60		Beginning Inventory	=$E$4	=$F$4	=D60*E60
61		Purchases
62		43168	=$E$6	=$F$6	=D62*E62
63		43181	=$E$8	=$F$8	=D63*E63
64		43189	=$E$10	=$F$10	=D64*E64
65		Total purchases	=D62+D63+D64		=SUM(F62:F64)
66		Cost of Goods Available for sale	=D60+D65		=F60+F65
67		Cost of Goods Sold
68		5-Mar Sale
69		Units from Beginning Inventory	=D53	=E60	=D69*E69
70		17-Mar Sale
71		Units from Beginning Inventory	=D60-D69	=E60	=D71*E71
72		Units from Mar 9 Purchase	=D54-D71	=E62	=D72*E72
73		27-Mar Sale
74		Units from Mar 9 Purchase	=D62-D72	=E62	=D74*E74
75		Units from Mar-22 Purchase	=D55-D74	=E63	=D75*E75
76		Total Cost of Goods Sold	=SUM(D69:D75)		=SUM(F69:F75)
77		Ending Inventory	=D66-D76		=F66-F76
78
79		Hence using FIFO method,
80		Cost of goods sold	=F76
81		Ending Inventory	=F77
82
83		3)
84
85		Using LIFO Method:
86		In LIFO method invetory that is purchased last is sold first and older inventory is used after that.
87
88		5-Mar Sale	=$E$5
89		17-Mar Sale	=$E$7
90		27-Mar Sale	=$E$9
91		Total Units sold	=D88+D89+D90
92
93		LIFO
94			Units	Cost per unit	Total
95		Beginning Inventory	=$E$4	=$F$4	=D95*E95
96		Purchases
97		43168	=$E$6	=$F$6	=D97*E97
98		43181	=$E$8	=$F$8	=D98*E98
99		43189	=$E$10	=$F$10	=D99*E99
100		Total purchases	=D97+D98+D99		=SUM(F97:F99)
101		Cost of Goods Available for sale	=D95+D100		=F95+F100
102		Cost of Goods Sold
103		5-Mar Sale
104		Units from Beginning Inventory	=D88	=E95	=D104*E104
105		17-Mar Sale
106		Units from Mar 9 Purchase	8	=E97	=D106*E106
107		27-Mar Sale
108		Units from Mar 9 Purchase	=D97-D106	=E97	=D108*E108
109		Units from Mar-22 Purchase	=D90-D108	=E98	=D109*E109
110		Total Cost of Goods Sold	=SUM(D104:D109)		=SUM(F104:F109)
111		Ending Inventory	=D101-D110		=F101-F110
112
113		Hence using LIFO method,
114		Cost of goods sold	=F110
115		Ending Inventory	=F111
116
117		4)
118
119		Weighted average method
120		Weighted average method assumed that goods available for sale are homogeneous.
121		Average cost is found by dividing cost of goods available for sales with number of units available for sale.
122
123			Units	Cost per unit	Total
124		Beginning Inventory	=$E$4	=$F$4	=D124*E124
125		Purchases
126		43168	=$E$6	=$F$6	=D126*E126
127		43181	=$E$8	=$F$8	=D127*E127
128		43189	=$E$10	=$F$10	=D128*E128
129		Total purchases	=D126+D127+D128		=SUM(F126:F128)
130		Cost of Goods Available for sale	=D124+D129		=F124+F129
131
132		Average cost per unit	=F130/D130
133		Number of units sold	=D12
134
135		Cost of goods Sold	=Number of units sold*Average cost
136			=D133*D132	=D133*D132
137
138		Ending Inventory	=Cost of goods available for sale - Cost of goods sold
139			=F130-D136	=F130-D136
140
141		Hence using weighted average method,
142		Cost of goods sold	=D136
143		Ending Inventory	=D139
144