Question

Cheyenne Inc. is a retailer operating in British Columbia. Cheyenne uses the perpetual inventory method. All sales returns from customers result in the goods being returned to inventory; the inventory is not damaged. Assume that there are no credit transactions; all amounts are settled in cash. You are provided with the following information for Cheyenne Inc. for the month of January 2020.

For each of the following cost flow assumptions, calculate cost of goods sold, ending inventory, and gross profit. (1) LIFO. (2) FIFO. (3) Moving-average cost. (Round average-cost per unit to 3 decimal places, e.g. 12.502 and final answers to 0 decimal places, e.g. 1,250.)

		LIFO		FIFO		Moving-average
Cost of goods sold		$		$		$
Ending inventory		$		$		$
Gross profit		$		$		$

Date			Description		Quantity			Unit Cost or Selling Price
January	1		Beginning inventory		125			$12
January	5		Purchase		175			15
January	8		Sale		138			25
January	10		Sale return		13			25
January	15		Purchase		69			17
January	16		Purchase return		6			17
January	20		Sale		113			29
January	25		Purchase		25			19

Answer 1

	Units	SP	Sales
Sale	138	25	3450
Sale return	(13)	25	(325)
Sale	113	29	3277
Sales			6402

FIFO:

FIFO	PUR	CHASE	COST	SA	LES	COST	END	ING	GOODS
Date	Units	Unit Cost	Cost	Units	Unit Cost	Cost	Units	Unit Cost	Cost
Jan 1							125	12	1500
5	175	15	2625				125	12	1500
							175	15	2625
8				125	12	1500	162	15	2430
				13	15	195
10				(13)	15	(195)	175	15	2625
15	69	17	1173				175	15	2625
							69	17	1173
16	(6)	(17)	(102)				175	15	2625
							63	17	1071
20				113	15	1695	62	15	930
							63	17	1071
25	25	19	475				62	15	930
							63	17	1071
							25	19	475
							150		2476

	($)	Calculation
Cost of goods sold	3195	(1500 + 1695)
Ending inventory	2476
Gross profit	3207	(6402 - 3195)

.

LIFO:

LIFO	PUR	CHASE	COST	SA	LES	COST	END	ING	GOODS
Date	Units	Unit Cost	Cost	Units	Unit Cost	Cost	Units	Unit Cost	Cost
Jan 1							125	12	1500
5	175	15	2625				125	12	1500
							175	15	2625
8				138	15	2070	125	12	1500
							37	15	555
10				(13)	15	(195)	125	12	1500
							50	15	750
15	69	17	1173				125	12	1500
							50	15	750
							69	17	1173
16	(6)	17	(102)				125	12	1500
							50	15	750
							63	17	1071
20				63	17	1071	125	12	1500
				50	15	750
25	25	19	475				125	12	1500
							25	19	475
							150		1975

	($)	Calculation
Cost of goods sold	3696	(1875 + 1071 + 650)
Ending inventory	1975
Gross profit	2706	(6402 - 3696)

.

Moving Average:

MA	PUR	CHASE	COST	SA	LES	COST	END	ING	GOODS
Date	Units	Unit Cost	Cost	Units	Unit Cost	Cost	Units	Unit Cost	Cost
Jan 1							125	12	1500
5	175	15	2625				300	13.75	4125
8				138	13.75	1897.5	162	13.75	2227.5
10				(13)	13.75	(178.75)	175	13.75	2406.25
15	69	17	1173				244	14.67	3579.25
16	(6)	14.67	(88)				238	14.67	3491.25
20				113	14.67	1657.6	125	14.67	1833.65
25	25	19	475				125	14.67	2308.65
							150		2308.65

	($)	Calculation
Cost of goods sold	3555.1	(1897.5+ 1657.6)
Ending inventory	2308.65
Gross profit	2846.9	(6402 - 3555.1)