Question

Steven’s Televisions produces television sets in three categories: portable, midsize, and flat-screen. On January 1, 2020, Steven adopted dollar-value LIFO and decided to use a single inventory pool. The company’s January 1 inventory consists of:

Category		Quantity		Cost per Unit		Total Cost
Portable		13,800		$100		$ 1,380,000
Midsize		18,400		250		4,600,000
Flat-screen		6,900		400		2,760,000
		39,100				$8,740,000

During 2020, the company had the following purchases and sales.

Category		Quantity Purchased		Cost per Unit		Quantity Sold		Selling Price per Unit
Portable		34,500		$110		32,200		$150
Midsize		46,000		300		55,200		400
Flat-screen		23,000		500		13,800		600
		103,500				101,200

Assume the company uses three inventory pools instead of one. Compute ending inventory, cost of goods sold, and gross profit. (Round price index to 2 decimal places, e.g. 1.45 and final answers to 0 decimal places, e.g. 6,548.)

Ending inventory		$
Cost of goods sold		$
Gross profit		$

Answer 1

Answer:

S. No.	Particulars	Portable	Mid size	Flat Screen
1	Opening( in Qty.)	13800	18400	6900
2	Cost	100	250	400
3	Total Opening Cost	1380000	4600000	2760000
4	Purchases(in Qty.)	34500	46000	23000
5	Cost	110	300	500
6	Total Purchase Cost	3795000	13800000	11500000
7	Sales(in Qty.)	32200	55200	13800

8	Selling Price	150	400	600
9	Total Sales	4830000	22080000	8280000
10	Closing Inventory(in Qty.) (1+4-7)	16100	9200	16100

In the above mentioned table,

Since LIFO method is followed,

Closing Inventory in $:

The Closing Inventory(Portable) of 16100 units constitutes 13800 units of Opening Qty. and 2300 units of purchases made during the year.

So the Closing Inventory(Portable) in $ will be (13800*100) + (2300*110) = $1633000

The Closing Inventory(Mid size) of 9200 units constitutes 9200 units of Opening Qty.

So the Closing Inventory(Mid size) in $ will be 9200*250 = $2300000

The Closing Inventory(Flat Screen) of 16100 constitutes 6900 units of Opening Qty. and 9200 of purchases made during the year.

So the Closing Inventory(Flat Screen) in $ will be (6900*400) + (9200*500) = $7360000

Cost of Goods sold:

Of Portable:

Sales of 32200 constitutes 32200 of purchases made during the year

So the Cost of Goods sold = 32200*110 = $3542000

Of Mid Size:

Sales of 55200 constitutes 46000 of purchases made during the year and 9200 of Opening qty.

and So the Cost of Goods sold = (46000*300) + (9200*250)= $16100000

Of Flat Screen:

Sales of 13800 constitutes 13800 of purchases made during the year

and So the Cost of Goods sold = 13800*500 = $6900000

Gross Profit = Sales - Cost of Goods Sold

Of Portable:

Gross Profit: $4830000- $3542000 = $1288000

Of Mid Size:

Gross Profit: $22080000- $16100000 = $5980000

Of Flat Screen:

Gross Profit: $8280000- $6900000 = $1380000