Question

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

100

units

@ $51.00 per unit

Mar.

5

Purchase

225

units

@ $56.00 per unit

Mar.

9

Sales

260

units

@ $86.00 per unit

Mar.

18

Purchase

85

units

@ $61.00 per unit

Mar.

25

Purchase

150

units

@ $63.00 per unit

Mar.

29

Sales

130

units

@ $96.00 per unit

Totals

560

units

390

units

Problem 5-1A Part 1

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

Problem 5-1A Part 2

2. Compute the number of units in ending inventory.

Problem 5-1A Part 3

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 65 units from beginning inventory and 195 units from the March 5 purchase; the March 29 sale consisted of 45 units from the March 18 purchase and 85 units from the March 25 purchase.

Problem 5-1A Part 4

4. Compute gross profit earned by the company for each of the four costing methods. For specific identification, the March 9 sale consisted of 65 units from beginning inventory and 195 units from the March 5 purchase; the March 29 sale consisted of 45 units from the March 18 purchase and 85 units from the March 25 purchase. (Round weighted average cost per unit to two decimals and final answers to nearest whole dollar.)

Answer 1