Question
In: Accounting
Yang Corporation uses the periodic inventory system. The following sales and purchases of the same product...
Yang Corporation uses the periodic inventory system. The following sales and purchases of the same product were made during 20x1 at Yang Corporation. The opening inventory consisted of 50 units at $2 each.
|
Purchases |
Sales |
||||||
|
Date |
Units |
$ per unit |
Date |
Units |
Unit $Price |
Total |
|
|
March 15 |
200 |
3 |
April 25 |
250* |
5 |
||
|
June 15 |
600 |
5 |
June 30 |
500** |
6 |
||
*for specific identification, sold 50 units of opening inventory and 200 units of March 15 purchase
**for specific identification, sold 500 units of June 15 purchase
Requirements:
1. Calculate cost of goods sold and the cost of ending inventory under FIFO, LIFO, specific identification, and weighted average inventory cost flow assumptions. Use the student template #1
2. Calculate and compare the effect on profit of the four inventory cost flow assumptions.
| ACT300 Principles of Accounting I | |||||||||||||
| Module 4: Critical Thinking Template Option #1 | |||||||||||||
| FIFO | Units | Cost per unit | Sale per Unit | Totals | |||||||||
| Beginning Inventory | - | $0.00 | $0.00 | $0 | |||||||||
| Purchases and Sales | |||||||||||||
| Mar 15-Purchase | - | $0.00 | $0.00 | $0 | Data from the problem | ||||||||
| April 25-Sale | - | $0.00 | $0.00 | 0 | The opening inventory consisted of 50 units at $2 each. | ||||||||
| Jun 15-Purchase | - | $0.00 | $0.00 | 0 | |||||||||
| Jun 30-Sale | - | $0.00 | $0.00 | 0 | Purchases | Sales | |||||||
| Cost of Goods Available for Sale | - | $0.00 | $0.00 | $0 | Date | Units | $ per unit | Date | Units | Unit $Price | |||
| Cost of Goods Sold (COGS) | - | $0.00 | $0.00 | 0 | 15-Mar | 200 | 3 | 25-Apr | 250* | 5 | |||
| Ending Inventory | - | $0.00 | $0.00 | $0 | 15-Jun | 600 | 5 | 30-Jun | 500** | 6 | |||
| COGS Calculation | Units | COGS | SalesTotals | Gross Profit | |||||||||
| Beginning Inventory | - | $0.00 | $0.00 | $0 | |||||||||
| Purchases - Mar 15 | - | $0.00 | $0.00 | $0 | |||||||||
| Sale - April 25 | - | $0.00 | $0.00 | $0 | |||||||||
| Purchases - June 15 | $0.00 | $0.00 | $0 | ||||||||||
| Sale - June 30 | $0.00 | $0.00 | $0 | ||||||||||
| . | . | ||||||||||||
| Totals | - | $0.00 | $0.00 | $0 | |||||||||
Solutions
Expert Solution
| 1...Since it's periodic inventory | |||
| Calculations are made at the year-end only , as follows as per | |||
| FIFO cost flow assumption: | |||
| Units | Total cost | ||
| Goods available for sale(50+200+600) | 850 | 3700 | (100+600+3000) |
| Less:Ending Inventory (under this assumption) | 100 | 500 | (Last purchase) |
| Cost of goods sold | 750 | 3200 | |
| Sale Value (250+500) | 750 | 4250 | (250*5)+(500*6) |
| Gross profit | 1050 | ||
| LIFO cost flow assumption: | |||
| Units | Total cost | ||
| Goods available for sale(50+200+600) | 850 | 3700 | (100+600+3000) |
| Less:Ending Inventory (under this assumption) | 100 | 250 | (50*2)+(50*3) |
| Cost of goods sold | 750 | 3450 | |
| Sale Value (250+500) | 750 | 4250 | (250*5)+(500*6) |
| Gross profit | 800 | ||
| Wt. Av.cost flow assumption: | |||
| Units | Total cost | ||
| Goods available for sale(50+200+600) | 850 | 3700 | (100+600+3000) |
| Less:Ending Inventory (under this assumption) | 100 | 435 | (3700/850)*100 |
| Cost of goods sold | 750 | 3265 | |
| Sale Value (250+500) | 750 | 4250 | (250*5)+(500*6) |
| Gross profit | 985 | ||
| Specific Identity cost flow assumption: | |||
| Units | Total cost | ||
| Goods available for sale(50+200+600) | 850 | 3700 | (100+600+3000) |
| Less:Ending Inventory (under this assumption) | 100 | 500 | (Sale identified) |
| Cost of goods sold(50+200+500) | 750 | 3200 | (50*2)+(200*3)+(500*5) |
| Sale Value (250+500) | 750 | 4250 | (250*5)+(500*6) |
| Gross profit | 1050 |
| 2… | |||
| Cost flow assumption | Ending Inventory | COGS | Gross Profit |
| FIFO | 500 | 3200 | 1050 |
| LIFO | 250 | 3450 | 800 |
| Wt. Av. | 435 | 3265 | 985 |
| Specific Identity | 500 | 3200 | 1050 |
| LIFO gives the least gross profit as COGS are valued at the latest prices. | |||
ekkarill92 answered 2 years agoRelated Solutions
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Warnerwoods Company uses a periodic 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
130
units
@ $65 per unit
Mar.
5
Purchase
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units
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Sales
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@ $100 per unit
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18
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Purchase
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Warnerwoods Company uses a periodic inventory system. It entered into the following purchases and sales transactions...
Warnerwoods Company uses a periodic 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
150
units
@
$40 per unit
Mar.
5
Purchase
450
units
@ $45 per
unit
Mar.
9
Sales
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units
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unit
Mar.
18
Purchase
220
units
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Mar.
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units
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Mar.
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Warnerwoods Company uses a periodic inventory system. It entered into the following purchases and sales transactions...
Warnerwoods Company uses a periodic 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
130
units
@ $65 per unit
Mar.
5
Purchase
430
units
@ $70 per unit
Mar.
9
Sales
450
units
@ $100 per unit
Mar.
18
Purchase
180
units
@ $75 per unit
Mar.
25
Purchase
260
units
@ $77 per unit
Mar.
29
Sales
220
units
@...
Warnerwoods Company uses a periodic inventory system. It entered into the following purchases and sales transactions...
Warnerwoods Company uses a periodic 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 105 units @ $40.00 per unit Mar. 5 Purchase 405
units @ $45.00 per unit Mar. 9 Sales 425 units @ $75.00 per unit
Mar. 18 Purchase 130 units @ $50.00 per unit Mar. 25 Purchase 210
units @ $52.00 per unit Mar. 29 Sales 170 units @...
Warnerwoods Company uses a periodic inventory system. It entered into the following purchases and sales transactions...
Warnerwoods Company uses a periodic 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 145 units @ $80 per unit Mar. 5 Purchase 445
units @ $85 per unit Mar. 9 Sales 465 units @ $115 per unit Mar. 18
Purchase 210 units @ $90 per unit Mar. 25 Purchase 290 units @ $92
per unit Mar. 29 Sales 250 units @...
Warnerwoods Company uses a periodic inventory system. It entered into the following purchases and sales transactions...
Warnerwoods Company uses a periodic 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 140 units @ $75 per unit Mar. 5 Purchase 440
units @ $80 per unit Mar. 9 Sales 460 units @ $110 per unit Mar. 18
Purchase 200 units @ $85 per unit Mar. 25 Purchase 280 units @ $87
per unit Mar. 29 Sales 240 units @...
Warnerwoods Company uses a periodic inventory system. It entered into the following purchases and sales transactions...
Warnerwoods Company uses a periodic 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
@ $50.00 per unit
Mar.
5
Purchase
400
units
@ $55.00 per unit
Mar.
9
Sales
420
units
@ $85.00 per unit
Mar.
18
Purchase
120
units
@ $60.00 per unit
Mar.
25
Purchase
200
units
@ $62.00 per unit
Mar.
29
Sales
160
units
@...
Warnerwoods Company uses a periodic inventory system. It entered into the following purchases and sales transactions for March.
Warnerwoods Company uses a periodic 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
200
units
@ $90 per unit
Mar.
5
Purchase
500
units
@ $95 per unit
Mar.
9
Sales
520
units
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...
Montoure Company uses a periodic inventory system. It entered into the following calendar-year purchases and sales...
Montoure Company uses a periodic inventory system. It entered
into the following calendar-year purchases and sales
transactions.
Date
Activities
Units Acquired at Cost
Units Sold at Retail
Jan.
1
Beginning inventory
700
units
@ $40.00 per unit
Feb.
10
Purchase
450
units
@ $37.00 per unit
Mar.
13
Purchase
250
units
@ $22.00 per unit
Mar.
15
Sales
850
units
@ $70.00 per unit
Aug.
21
Purchase
200
units
@ $45.00 per unit
Sept.
5
Purchase
600
units
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Montoure Company uses a periodic inventory system. It entered into the following calendar-year purchases and sales...
Montoure Company uses a periodic inventory system. It entered
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Date Activities Units Acquired at Cost Units Sold at Retail Jan. 1
Beginning inventory 790 units @ $85.00 per unit Feb. 10 Purchase
495 units @ $82.00 per unit Mar. 13 Purchase 295 units @ $67.00 per
unit Mar. 15 Sales 895 units @ $115.00 per unit Aug. 21 Purchase
290 units @ $90.00 per unit Sept. 5 Purchase 690 units @ $86.00...
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