Q. a) On March 1st, Max had six TVs ($200 cost). Each Monday this month (March...

Q. a) On March 1st, Max had six TVs ($200 cost). Each Monday this month (March 6th, 13th, 20th, and 28th), Max purchased ten TVs from his supplier. The price increased to $210 on March 12th but dropped to $205 on March 28th. Max sold five TVs in week one, eight in week two, eleven in week three, and six in week four. Assuming the selling price was $400 per TV and Max uses the moving- weighted-average method, what was his gross margin for March? Make all necessary journal entries and SHOW YOUR WORK!

b) Repeat a, but using the first-in-first-out method.

Solutions

Expert Solution


STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL WEIGHTED AVERAGE METHOD
	RECIEPTS	COST OF GOODS SOLD	BALANCE
DATE	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $
01-Mar							6	200	1200
06-Mar	10	200	2000				16	200	3200
07-Mar				5	200	1000	11	200	2200
13-Mar	10	210	2100				11	200	2200
							10	210	2100
Average							21	204.76	4300
14-Mar				8	204.76	1638	13	204.76	2662
20-Mar	10	210	2100				13	204.76	2662
							10	210	2100
Average							23	207.04	4762
21-Mar				11	207.04	2277	12	207.04	2485
28-Mar	10	205	2050				12	207.04	2485
							10	205	2050
							22	206.14	4535
28-Mar				6	206.14	1237	16	206.14	3298
TOTAL	40		8250	30		6152	16	206.14	3298

Sales (30 units @400)	12000
Less: COGS		6152
Gross margin		5848



STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL FIFO METHOD
	RECIEPTS	COST OF GOODS SOLD	BALANCE
DATE	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $
01-Mar							6	200	1200
06-Mar	10	200	2000				16	200	3200
07-Mar				5	200	1000	11	200	2200
13-Mar	10	210	2100				11	200	2200
							10	210	2100
14-Mar				8	200	1600	3	200	600
							10	210	2100
20-Mar	10	210	2100				3	200	600
							20	210	4200
21-Mar				3	200	600
				8	210	1680	12	210	2520
28-Mar	10	205	2050				12	210	2520
							10	205	2050
28-Mar				6	210	1260	6	210	1260
							10	205	2050
TOTAL	40		8250	30		6140	16		3310
								`
Sales reveue		12000
Less: COGS		6140
Gross margin		5860

ekkarill92 answered 1 year ago

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