Question

M.T. Glass, Inc. employs a periodic inventory system and sells its inventory to customers for $14.25 per unit. On June 1, M.T. Glass had an inventory with a total cost of $75,000 on hand.

During June, M.T. Glass recorded the following purchases of inventory:

June 9-8,000 units purchased at $7.10 per unit

June 12-????? units purchased at $5.70 per unit

June 19-14,000 units purchased at $6.80 per unit

June 26-16,000 units purchased at ????? per unit

During June, M.T. Glass sold 38,000 units and had 22,000 units left unsold on June 30.

Using FIFO, M.T. Glass calculated its income before tax for June to be $158,300 and its ending inventory on June 30 to be $124,000.

Using a weighted average, M.T. Glass calculated its gross profit for June to be $308,940.

Using LIFO, M.T. Glass calculated its net income for June to be $111,825.

Calculate the unit cost of M.T. Glass' beginning inventory.

Do not copy from Chegg, otherwise, I have to report the answer.

Answer 1

Inventory Information

TAB-1

Total Units

Units Sold + Closing Inventory = 38000+22000 = 60000 units

This implies QTY column total = A+B+8000 + 14000 + 16000 = A +B + 38000 = 60000

FINDING "D" & "E"(refer TAB-1)

FIFO method Inventory Value of 22000 units = 124000

Since method is FIFO it means the break up of closing inventory units is -

16000 units are of purchases on 26 Jun with rate "D" and 6000 units are out of Purchases made on 19 Jun with rate 6.80

Therefore we get:

124000 = 16000*D + 6000*6.80

D = 5.20 giving purchase value of 26 June = 16000*5.2=83200=E

Now Inventory Table will looks

TAB-2

FINDING - "C" (refer TAB-2)

Under Weighted Average Method Gross Profit reported is 308940

This implies:

Gross Profit = Sales Revenue - Cost Of Goods Sold , Or

308940 = 38000*14.25 - CoGS , Or

CoGS = 232560

Cost per unit of sold units = 232560 / 38000 = 6.12

Therefore total of VALUE column = 60000*6.12 = 367200 (since weighted average = Total Value / Total Qty)

Total Value = 75000 + 56800 + C + 95200 + 83200 , Or

367200 = 75000 + 56800 + C + 95200 + 83200 , Or

C = 57000

The Inventory table now looks as hereunder

TAB-3

FINDIND - "B" (refer TAB-3)

Clearly B = 57000 / 5.70 = 10000

The Inventory table now looks as hereunder

TAB-4

FINDING "A" and "x" (refer TAB-4)

Clearly

A = 60000 - (8000+10000+14000+16000) = 12000

If A = 12000 then "x" will be

75000 / 12000 = 6.25

The Completed Inventory Table with Unit rate of Opening Stock and all the misisng Information looks as hereunder :

TAB-5