Question

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.	Compare the gross profit and the March 31 inventories.

Answer 1

Units in ending inventory = Total purchases units-total sales units

Units in ending inventory= 136,500-125,250 = 11,250 units

Date	Units	Unit Cost	Amount
Jan 1	7,500	$75	$562,500
Jan 10	22,500	85	1,912,500
Feb.10	54,000	87.5	4,725,000
Mar. 5	45,000	89.5	4,027,500
Mar.25	7,500	90	675,000
Cost of goods available for sale	136,500		$11,902,500

1.

FIFO:

Cost of ending inventory = $675,000+(11,250-7,500) 3,750*$89.5 = $1,010,625

Cost of goods sold = Cost of goods available for sale - Cost of ending inventory

Cost of goods sold = $11,902,500 - 1,010,625 = $10,891,875

2.

LIFO:

Cost of ending inventory = $562,500 + 3,750*$85 = $881,250

Cost of goods sold = Cost of goods available for sale - Cost of ending inventory

Cost of goods sold = $11,902,500 - 881,250 = $11,021,250

3.

Weighted average cost:

Average cost per unit = $11,902,500/136,500 = $89.20

Cost of ending inventory = 11,250 *$89.20 = $1,003,500

Cost of goods sold = 125,250*$89.20 = $11,172,300

4.

	FIFO	LIFO	Weighted average
Sales	$19,875,000	$19,875,000	$19,875,000
Cost of goods sold	-10,891,875	-11,021,250	-11,172,300
Gross profit	$8,983,125	$8,853,750	$8,702,700
March 31 inventories	$1,010,625	$881,250	$1,003,500