Question

Given the following information for Maynor Company in 2011, calculate the company's ending inventory, cost of goods sold and gross profit, using the following inventory costing methods, assuming the company uses a periodic inventory system: (Note: The sum of cost of goods sold and ending inventory might not add up due to rounding.)

2011		Units		Unit Cost			Total Cost
Jan 1	Beginning Inventory	14		$	60		$	840
Purchases
March 28	Purchase	20			66			1,320
Aug 22	Purchase	24			70			1,680
Oct 14	Purchase	29			76			2,204
Goods Available for Sale		87					$	6,044
Sales				Unit Sales Price			Revenue
May 1	Sales	29		$	100		$	2,900
October 28	Sales	24			100			2,400
Total Revenue		53					$	5,300
(a) Weighted Average   Ending inventory $      Cost of goods sold $      Gross profit $    (b) FIFO.   Ending inventory $      Cost of goods sold $      Gross profit $    ) LIFO Ending inventory$     Cost of goods sold$     Gross profit$    Specific Identification   Ending inventory $      Cost of goods sold $      Gross profit $    ) LIFO Ending inventory$     Cost of goods sold$     Gross profit$    Specific Identification   Ending inventory $      Cost of goods sold $      Gross profit $

Answer 1

(a)

Weighted Average:

Ending Inventory

Cost of goods sold

Gross profit

Working:

Weighted Average rate

=

Total costs/Total Units

=

$6,044.00

/

87

=

$     69.47

Units in Ending inventory

=

Goods Available for sale-Goods sold

=

87

-

53

=

34

Cost of ending Inventory

=

Units in Ending inventory*Weighted Average rate

=

34

x

$     69.47

=

$2,362.02

Cost of goods sold

=

Units sold

x

Average cost per unit

=

53

x

$     69.47

=

$3,681.98

Gross Profit

=

Sales Revenue-Cost of goods sold

=

5300

-

$3,681.98

=

$1,618.02

(b)

FIFO:

Ending Inventory

$     2,554

Cost of goods sold

$     3,490

Gross profit

$     1,810

Working:

In FIFO inventory bought first is sold first.So remaining ending inventory would be after selling units first bought.

i.

Ending inventory's cost is calculated as follow:

Date

Units

Unit costs

Total

Aug-22

5

$   70.00

$         350

Oct-14

29

$   76.00

$      2,204

Total

$      2,554

ii.

Cost of goods sold

=

Goods available for sale-Ending inventory

=

$6,044.00

-

$2,554.00

=

$3,490.00

iii.

Gross Profit

=

Sales Revenue-Cost of goods sold

=

5300

-

$3,490.00

=

$1,810.00

©

LIFO

Ending Inventory

$     2,160

Cost of goods sold

$     3,884

Gross profit

$     1,416

Working:

In LIFO inventory bought first is sold first.

i.

Ending inventory's cost is calculated as follow:

Date

Units

Unit costs

Total

Jan-01

14

$   60.00

$         840

Mar-28

20

$   66.00

$      1,320

Total

$      2,160

ii.

Cost of goods sold

=

Goods available for sale-Ending inventory

=

$6,044.00

-

$2,160.00

=

$3,884.00

iii.

Gross Profit

=

Sales Revenue-Cost of goods sold

=

5300

-

$3,884.00

=

$1,416.00