Question

Patti Devine owns Devine Decorating. One of her most popular items is the Remind-a-Chime digital clock. This programmable clock issues "voice-based" reminders of important events like birthdays, anniversaries, etc. Following is the Remind-a-Chime inventory activity for January. The clocks on hand at January 1 had a unit cost of $140.

Date	Purchases	Sales	Amt on Hand
1 Jan			40
5 Jan	60 units @ $150 each		100
16 Jan		70 units @ $255 each	30
23 Jan	90 units @ $170 each		120
28 Jan		55 units @ $295 each	65

(a) If Devine uses the first-in, first-out (FIFO) inventory method (periodic approach), what values would be assigned to ending inventory and cost of goods sold? How much is gross profit? (b) If Devine uses the last-in, first-out (LIFO) inventory method (periodic approach), what values would be assigned to ending inventory and cost of goods sold? How much is gross profit? (c) If Devine uses the weighted-average inventory method (periodic approach), what values would be assigned to ending inventory and cost of goods sold? How much is gros

Answer 1

	Unit	Unit Cost	total Cost
Beginning inventory	40	140	5600
Purchase	60	150	9000
Purchase	90	170	15300
Total	190		29900

a) FIFO :

Ending inventory (65*170)	11050
Cost of goods sold (29900-11050)	18850
Gross profit (70*255+55*295)-18850	15225

b)LIFO :

Ending inventory (40*140+25*150)	9350
Cost of goods sold (29900-9350)	20550
Gross profit (70*255+55*295)-20550	13525

c) Weighted average

Ending inventory (29900/190*65)	10229
Cost of goods sold (29900-10229)	19671
Gross profit (70*255+55*295)-19671	14404