Question

Use the following information to complete the charts and calculate cost of goods sold, ending inventory, and gross profit under the FIFO, LIFO, and Weighted Average methods. Units Cost Units Retail Oct. 1 Beginning Inventory 120 $39 Oct. 3 Sales 90 $100 Oct. 5 Purchase 140 $40 Oct. 12 Sales 110 $100 Oct. 18 Sales 45 $100 Oct. 26 Purchase 160 $43

Answer 1

	Inventory Method		Ending inventory	Cost of goods sold	Sales	Gross profit
Note 1	First-in-First-out (FIFO)		7,480	9,680	24,500	14,820
Note 2	Last-in-First-out LIFO)		6,880	10,280	24,500	14,220
Note 3	Weighted Average		7,150	10,010	24,500	14,490
	Data in the questions is shown as below:-
Transaction	Date	Units	Rate	Amount ($)
Beg Inv	Oct 1	120	39	4,680
Sales	Oct 3	90	100	9,000
Purchases	Oct 5	140	40	5,600
Sales	Oct 12	110	100	11,000
Sales	Oct 18	45	100	4,500
Purchases	Oct 26	160	43	6,880
	Total sales unit = (90+110+45) = 245 units
	Ending inventory = (120+140+160-245) = 175 units
	Total sales = (9,000+11,000+4,500) = 24,500
Note 1	First-in-First-out (FIFO):-
	Under this method, 245 units sold means 120 units of Oct,1 ,125 units of Oct 5 must have been sold.
	Ending Inventory		(140-125)	Oct 5	15	40	600
				Oct 26	160	43	6,880
					175		7,480
	Cost of goods Sold			Oct 1	120	39	4,680
				Oct 5	125	40	5,000
					245		9,680
Note 2	Last-in-First-out LIFO):-
	Under this method, 245 units sold means 160 units of Oct 26 and 85 units of Oct 5 must have been sold
	Ending Inventory		(140-85)	Oct 5	55	40	2,200
				Oct 1	120	39	4,680
					175		6,880
	Cost of goods Sold			Oct 26	160	43	6,880
				Oct 5	85	40	3,400
					245		10,280
Note 3	Weighted average cost:-
	Ending inventory and cost of inventory sold will be calculated using Weighted average cost
			Units	Rate	Amount ($)
		Oct 1	120	39	4,680
		Oct 5	140	40	5,600
		Oct 26	160	43	6,880
			420		17,160
	Average cost = (17,160/420) = $40.86
	Hence, Ending Inventory is (40.86*175) = 7,150
	And, Cost of goods Sold is (40.86*245) = 10,010