Question

Jenn's Tents and More Shop sells high quality tents. She would like you to calculate the Cost of Goods Sold, the Ending Inventory and the Gross Profit for her under FIFO, LIFO and Weighted Average so she can determine which method she prefers to use

Additional info.: By the end of the month, she sold a total of 46 tents at a sales price of $1,400 each.

Beg. Inv. 30 Tents Cost $400 each

June 12 Purchase 20 Tents Cost $380 each

June 28 Purchase 10 Tents Cost $350 each

Answer Summary: FIFO LIFO WtdAvg

COGS

End. Inv.

Gross Profit

Answer 1

	FIFO	LIFO	WEIGHTED AVERAGE
Cost of goods sold	$18080	$17500	$17710
Ending Inventory	$5020	$5600	$5390
Gross Profit	$46320	$46900	$46690

Working Notes

1) FIFO

	Purchase	Sale	Closing Balance
Qty	Rate	Total	Qty	Rate	Total	Qty	Rate	Total
Beginning Inventory							30	400	12000
June 12	20	380	7600				30	400	12000
							20	380	7600
June 28	10	350	3500				30	400	12000
							20	380	7600
							10	350	3500
June 30				30	400	12000	4	380	1520
				16	380	6080	10	350	3500
Totals	30		11100	46		18080	14		5020

Cost of goods sold= $18080

Ending Inventory= $5020

Gross profit= Sales-Cost of goods sold

= (46 X 1400) - 18080

= 64400-18080

= $46320

2) LIFO

	Purchase	Sale	Closing Balance
Qty	Rate	Total	Qty	Rate	Total	Qty	Rate	Total
Beginning Inventory							30	400	12000
June 12	20	380	7600				30	400	12000
							20	380	7600
June 28	10	350	3500				30	400	12000
							20	380	7600
							10	350	3500
June 30				10	350	3500	14	400	5600
				20	380	7600
				16	400	6400
Totals	30		11100	46		17500	14		5600

Cost of goods sold= $17500

Ending Inventory= $5600

Gross profit= Sales-Cost of goods sold

= (46 X 1400) - 17500

= 64400 - 17500

= $46900

3) WEIGHTED AVERAGE

Inventory Details

	Qty	Rate	Total Cost
Beginning Inventory	30	400	12000
June 12	20	380	7600
June 28	10	350	3500
Total	60		23100

Weighted Average Cost= 23100/60= $385

Cost of goods sold= 46 X 385 = $17710

Ending Inventory= (60-46) X 385 = 14 X 385 = $5390

Gross profit= Sales-Cost of goods sold

= (46 X 1400) - 17710

= 64400 - 17710

= $46690