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M7-7 to M7-9 Calculating Cost of Goods Available for Sale, Ending Inventory, Sales, Cost of Goods Sold, and Gross Profit under Periodic FIFO, LIFO, and Weighted Average Cost [LO 7-3]

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The following are the transactions for the month of July.

		Units		Unit Cost				Unit Selling Price
July 1	Beginning Inventory	51			$	10
July 13	Purchase	255				12
July 25	Sold	(100	)					$	16
July 31	Ending Inventory	206

M7-7 Calculating Cost of Goods Available for Sale, Ending Inventory, Sales, Cost of Goods Sold, and Gross Profit under Periodic FIFO [LO 7-3]

Calculate cost of goods available for sale and ending inventory, then sales, cost of goods sold, and gross profit, under FIFO. Assume a periodic inventory system is used. 

Answer 1

a)
FIFO	Cost of Goods available for Sales			Cost of goods sold			Ending Inventory
	Units	Cost per Unit ($)	Cost of Goods Available for Sales ($)	Units Sold	Cost per Unit ($)	Cost of Goods Available for Sales ($)	Units in the Ending Inventory	Cost per Unit ($)	Ending Inventory ($)
										Beginning Inventory	51	10	510	51	10	510
Purchases:
Jul-13	255	12	3,060	49	12	588	206	12	2,472
Total	306		3,570	100		1,098	206		2,472
		($)
Cost of Goods Sold		1,098
Cost of Ending Inventory		2,472
Sales = 100 units * $ 16 = $ 1,600
Gross Profit = Sales - Cost of Goods Sold
=	$ 1,600 - $ 1,098
=	$ 502
b)
LIFO	Cost of Goods available for Sales			Cost of goods sold			Ending Inventory
	Units	Cost per Unit ($)	Cost of Goods Available for Sales ($)	Units Sold	Cost per Unit ($)	Cost of Goods Available for Sales ($)	Units in the Ending Inventory	Cost per Unit ($)	Ending Inventory ($)
										Beginning Inventory	51	10	510			-	51	10	510
Purchases:
Jul-13	255	12	3,060	100	12	1,200	155	12	1,860
Total	306		3,570	100		1,200	206		2,370
		($)
Cost of Goods Sold		1,200
Cost of Ending Inventory		2,370
Sales = 100 units * $ 16 = $ 1,600
Gross Profit = Sales - Cost of Goods Sold
=	$ 1,600 - $ 1,200
=	$ 400
c)
Periodic Weighted Average Cost	Cost of Goods available for Sales			Cost of goods sold			Ending Inventory
	Units	Cost per Unit ($)	Cost of Goods Available for Sales ($)	Units Sold	Cost per Unit ($)	Cost of Goods Available for Sales ($)	Units in the Ending Inventory	Cost per Unit ($)	Ending Inventory ($)
										Beginning Inventory	51	10	510			-
Purchases:
Jul-13	255	12	3,060
Total	306	11.67	3,570	100	11.67	1,167	206	11.67	2,404
	Weighted Average Unit Cost = Total Cost of Inventory/ Total Units in Inventory
		=	$ 3,570 / 306
		=	$ 11.67
		($)
Cost of Goods Sold		1,167
Cost of Ending Inventory		2,404
Sales = 100 units * $ 16 = $ 1,600
Gross Profit = Sales - Cost of Goods Sold
=	$ 1,600 - $ 1,167
=	$ 433
*	Units of July 13 are purchased by the organisation from the suppliers,, there is not need to calculate the units of July 13, as these are purchased as per the requirement of the organisation.
*	These units will be added in the beginning inventory to calculate the total units availabe for sales.
	Total Cost of July 13 = No. of units * Cost per Unit = 255 units * $ 12 = $ 3,060