Question

Tamarisk, Inc. is a retailer operating in Calgary, Alberta. Tamarisk, Inc. uses the perpetual inventory method. Assume that there are no credit transactions; all amounts are settled in cash. You are provided with the following information for Tamarisk, Inc. for the month of January 2017.

date	description	quantity	unit cost or selling price
Dec 31	ending inventory	174	20
Jan 2	purchase	98	22
Jan 6	sale	197	40
Jan 9	purchase	68	24
Jan 10	sale	50	45
Jan 23	purchase	108	25
Jan 30	sale	135	48

for each of the cost flow assumptions (FIFO, LIFO, and Moving average) calculate cost of goods sold, ending inventory, and gross profit

Answer 1

Solution:

Computation of ending inventory COGS under FIFO
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-Jan	174	$20.00	$3,480.00	0	$0.00	$0.00	0	$0.00	$0.00	174	$20.00	$3,480.00
2-Jan	174	$20.00	$3,480.00	98	$22.00	$2,156.00	0	$0.00	$0.00	174	$20.00	$3,480.00
										98	$22.00	$2,156.00
6-Jan	174	$20.00	$3,480.00	0	$0.00	$0.00	174	$20.00	$3,480.00	75	$22.00	$1,650.00
	98	$22.00	$2,156.00				23	$22.00	$506.00
9-Jan	75	$22.00	$1,650.00	68	$24.00	$1,632.00	0	$0.00	$0.00	75	$22.00	$1,650.00
										68	$24.00	$1,632.00
10-Jan	75	$22.00	$1,650.00	0	$0.00	$0.00	50	$22.00	$1,100.00	25	$22.00	$550.00
	68	$24.00	$1,632.00							68	$24.00	$1,632.00
23-Jan	25	$22.00	$550.00	108	$25.00	$2,700.00	0	$0.00	$0.00	25	$22.00	$550.00
	68	$24.00	$1,632.00							68	$24.00	$1,632.00
										108	$25.00	$2,700.00
30-Jan	25	$22.00	$550.00	0	$0.00	$0.00	25	$22.00	$550.00	66	$25.00	$1,650.00
	68	$24.00	$1,632.00				68	$24.00	$1,632.00
	108	$25.00	$2,700.00				42	$25.00	$1,050.00
Total							382		$8,318.00	66		$1,650.00

Computation of ending inventory COGS under LIFO
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-Jan	174	$20.00	$3,480.00	0	$0.00	$0.00	0	$0.00	$0.00	174	$20.00	$3,480.00
2-Jan	174	$20.00	$3,480.00	98	$22.00	$2,156.00	0	$0.00	$0.00	174	$20.00	$3,480.00
										98	$22.00	$2,156.00
6-Jan	174	$20.00	$3,480.00	0	$0.00	$0.00	98	$22.00	$2,156.00	75	$20.00	$1,500.00
	98	$22.00	$2,156.00				99	$20.00	$1,980.00
9-Jan	75	$20.00	$1,500.00	68	$24.00	$1,632.00	0	$0.00	$0.00	75	$20.00	$1,500.00
										68	$24.00	$1,632.00
10-Jan	75	$20.00	$1,500.00	0	$0.00	$0.00	50	$24.00	$1,200.00	75	$20.00	$1,500.00
	68	$24.00	$1,632.00							18	$24.00	$432.00
23-Jan	75	$20.00	$1,500.00	108	$25.00	$2,700.00	0	$0.00	$0.00	75	$20.00	$1,500.00
	18	$24.00	$432.00							18	$24.00	$432.00
										108	$25.00	$2,700.00
30-Jan	75	$20.00	$1,500.00	0	$0.00	$0.00	108	$25.00	$2,700.00	66	$20.00	$1,320.00
	18	$24.00	$432.00				18	$24.00	$432.00
	108	$25.00	$2,700.00				9	$20.00	$180.00
Total							382		$8,648.00	66		$1,320.00

Computation of ending inventory COGS under Moving Average Cost
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-jan	174	$20.00	$3,480	0	$0.00	$0	0	$0.00	$0	174	$20.00	$3,480
2-jan	174	$20.00	$3,480	98	$22.00	$2,156	0	$0.00	$0	272	$20.72	$5,636
6-jan	272	$20.72	$5,636	0	$0.00	$0	197	$20.72	$4,082	75	$20.72	$1,554
9-jan	75	$20.72	$1,554	68	$24.00	$1,632	0	$0.00	$0	143	$22.28	$3,186
10-jan	143	$22.28	$3,186	0	$0.00	$0	50	$22.28	$1,114	93	$22.28	$2,072
23-jan	93	$22.28	$2,072	108	$25.00	$2,700	0	$0.00	$0	201	$23.74	$4,772
30-jan	201	$23.74	$4,772	0	$0.00	$0	135	$23.74	$3,205	66	$23.74	$1,567
Total							382		$8,401	66		$1,567

Date	Sales Qty	Selling Price	Sale Value
6-Jan	197	$40.00	$7,880.00
10-Jan	50	$45.00	$2,250.00
30-Jan	135	$48.00	$6,480.00
Total	382		$16,610.00

Computation of Gross Profit
Particulars	FIFO	LIFO	Moving Average
Sales	$16,610	$16,610	$16,610
Cost of goods sold	$8,318	$8,648	$8,401
Gross Profit (Sales - COGS)	$8,292	$7,962	$8,209