Question

Periodic Inventory by Three Methods

The beginning inventory at Midnight Supplies and data on purchases and sales for a three-month period ending March 31, are as follows:

Date		Transaction	Number of Units		Per Unit		Total
Jan. 1		Inventory	7,500		$75.00		$562,500
10		Purchase	22,500		85.00		1,912,500
28		Sale	11,250		150.00		1,687,500
30		Sale	3,750		150.00		562,500
Feb. 5		Sale	1,500		150.00		225,000
10		Purchase	54,000		87.50		4,725,000
16		Sale	27,000		160.00		4,320,000
28		Sale	25,500		160.00		4,080,000
Mar. 5		Purchase	45,000		89.50		4,027,500
14		Sale	30,000		160.00		4,800,000
25		Purchase	7,500		90.00		675,000
30		Sale	26,250		160.00		4,200,000

Required:

1. Determine the inventory on March 31 and the cost of merchandise sold for the three-month period, using the first-in, first-out method and the periodic inventory system.

Merchandise inventory, March 31	$fill in the blank 1
Cost of merchandise sold	$fill in the blank 2

2. Determine the inventory on March 31 and the cost of merchandise sold for the three-month period, using the last-in, first-out method and the periodic inventory system.

Merchandise inventory, March 31	$fill in the blank 3
Cost of merchandise sold	$fill in the blank 4

3. Determine the inventory on March 31 and the cost of merchandise sold for the three-month period, using the weighted average cost method and the periodic inventory system. Round the weighted average unit cost to the nearest cent and final answers to the nearest dollar.

Merchandise inventory, March 31	$fill in the blank 5
Cost of merchandise sold	$fill in the blank 6

4. Compare the gross profit and the March 31 inventories, using the following column headings. Enter all amounts as positive nu

Answer 1

Cost of Goods Available for sale
Activity	Units	Unit Price	Amount
Beginning Inventory	7500	$             75.00	$          562,500
Purchases
Jan. 10	22500	$             85.00	$       1,912,500
Feb. 10	54000	$             87.50	$       4,725,000
Mar. 5	45000	$             89.50	$       4,027,500
Mar. 25	7500	$             90.00	$          675,000
Total	136500		$    11,902,500

Average Cost per unit = $11902500 / 136500 = $87.20 per unit
Units sold = 125250 units
Units in ending inventory = 136500 - 125250 = 11250 units

1. FIFO
Merchandise Inventory = 7500 x $90 + 3750 x $89.50 = $1010625
Cost of Goods sold = $11902500 - 1010625 = $10891875

2. LIFO
Merchandise Inventory = 7500 x $75 + 3750 x $85 = $881250
Cost of Goods sold = $11902500 - 881250 = $11021250

3. Weighted Average
Merchandise Inventory = 11250 x $87.20 = $981000
Cost of Goods Sold = $11902500 - 981000 = $10921500

4.

	FIFO	LIFO	W. Avg
Sales Revenue	$   19,875,000	$   19,875,000	$     19,875,000
Cost of Goods Sold	$   10,891,875	$   11,021,250	$     10,921,500
Gross Profit	$    8,983,125	$     8,853,750	$       8,953,500