Question

Periodic Inventory by Three Methods

The beginning inventory at Midnight Supplies and data on purchases and sales for a three-month period ending March 31, 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

Required:

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

Merchandise inventory, March 31	$
Cost of merchandise sold	$

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

Merchandise inventory, March 31	$
Cost of merchandise sold	$

3. Determine the inventory on March 31 and the cost of merchandise 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 final answers to the nearest dollar.

Merchandise inventory, March 31	$
Cost of merchandise sold	$

4. Compare the gross profit and the March 31 inventories, using the following column headings. Enter all amounts as positive numbers.

	FIFO	LIFO	Weighted Average
Sales	$	$	$
Cost of merchandise sold
Gross profit	$	$	$
Inventory, March 31	$	$	$

Answer 1

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

Merchandise inventory, March 31 $1010625
Cost of merchandise sold $10891875

	Cost of Goods Available for Sale	Cost of Goods Sold	Ending Inventory
	# of units	Cost pu	Cost of Goods Available for Sale	# of units	Cost pu	Cost of Goods Sold	# of units	Cost pu	Ending Inventory
Beginning Inventory	7500	$75	$562500	7500	$75	$562500
Purchases:-
Jan 10	22500	$85	$1912500	22500	$85	$1912500
Feb 10	54000	$87.50	$4725000	54000	$87.50	$4725000
March 5	45000	$89.50	$4027500	41250	$89.50	$3691875	3750	$89.50	$335625
March 25	7500	$90	$675000				7500	$90	$675000
Total	136500		$11902500	125250		$10891875	11250		$1010625

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

Merchandise inventory, March 31 $881250
Cost of merchandise sold   $11021250

	Cost of Goods Available for Sale	Cost of Goods Sold	Ending Inventory
	# of units	Cost pu	Cost of Goods Available for Sale	# of units	Cost pu	Cost of Goods Sold	# of units	Cost pu	Ending Inventory
Beginning Inventory	7500	$75	$562500				7500	$75	$562500
Purchases:-
Jan 10	22500	$85	$1912500	18750	$85	$1593750	3750	$85	$318750
Feb 10	54000	$87.50	$4725000	54000	$87.50	$4725000
March 5	45000	$89.50	$4027500	45000	$89.50	$4027500
March 25	7500	$90	$675000	7500	$90	$675000
Total	136500		$11902500	125250		$11021250	11250		$881250

3. Determine the inventory on March 31 and the cost of merchandise 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 final answers to the nearest dollar.

Merchandise inventory, March 31    $981000
Cost of merchandise sold   $10921800

Average cost	Cost of Goods Available for Sale	Cost of Goods Sold	Ending Inventory
	# of units	Cost pu	Cost of Goods Available for Sale	# of units	Cost pu	Cost of Goods Available for Sale	# of units	Cost pu	Cost of Goods Available for Sale
Beginning Inventory	7500	$75	$562500	125250 $87.20   $10921800	11250       $87.20   $981000
Purchases:-
Jan 10	22500	$85	$1912500
Feb 10	54000	$87.50	$4725000
March 5	45000	$89.50	$4027500
March 25	7500	$90	$675000
Total	136500		$11902500	125250		$10921800	11250		$981000

Avg cost per unit = Total cost available for sale/No of units available for sale

     = $11902500/136500 = $87.20

4. Compare the gross profit and the March 31 inventories, using the following column headings. Enter all amounts as positive numbers.

	FIFO	LIFO	Weighted Average
Sales	$19875000	$19875000	$19875000
Cost of merchandise sold	$10891875	$11021250	$10921800
Gross Profit	$8983125	$8853750	$8953200
Inventory, March 31	$1010625	$881250	$981000

Sales = $1687500 + $562500 + $225000 + $4320000 + $4080000 + $4800000 + $4200000 = $19875000